The Relationship between Interest Rates and Metal Price Movements.
In recent years there have been many analyses of the rate of resource depletion, both with a view to defining an optimal depletion rate (as in Dasgupta and Heal (1974), Heal (1975)) and also with a view to analysing the depletion rate that one might expect to result from market forces (as in Dasgupt...
| Publicado en: | Review of Economic Studies Vol. 47; no. 1; pp. 161 - 182 |
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| Autores principales: | , |
| Formato: | Artículo |
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Oxford University Press / USA
Jan80
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=hlh&AN=4619477&site=ehost-live header: @attributes: shortDbName: hlh uiTerm: 4619477 longDbName: Humanities International Complete uiTag: AN controlInfo: bkinfo: jinfo: jid: 00346527 REM jtl: Review of Economic Studies issn: 00346527 maglogo: N pubinfo: dt: Jan80 vid: 47 iid: 1 pid: 622 pub: Oxford University Press / USA artinfo: ui: 4619477 10.2307/2297108 ppf: 161 ppct: 21 formats: tig: atl: The Relationship between Interest Rates and Metal Price Movements. aug: au: Heal, Geoffrey Barrow, Michael affil: University of Sussex su: Interest rates Supply & demand Copper prices Metal industry Metal prices Tin Economics Stock prices Mathematical models Markets Prices sug: subj: Interest rates Supply & demand Copper prices Metal industry Metal prices Tin Economics Stock prices Mathematical models Markets Prices ab: In recent years there have been many analyses of the rate of resource depletion, both with a view to defining an optimal depletion rate (as in Dasgupta and Heal (1974), Heal (1975)) and also with a view to analysing the depletion rate that one might expect to result from market forces (as in Dasgupta (1973), Solow (1974), Stiglitz (1974)). It is easily established (see Heal (1975), Solow (1974)) that a necessary condition for a finite stock of an exhaustible resource to be allocated efficiently over time is that the price, net of extraction costs, should rise at a rate equal to the rate of return on other assets. And, not surprisingly, competitive markets will under certain circumstances realize this condition. In particular, if owners of the resource regard it as a capital asset constituting an element of their portfolio, then they will hold it just as long as the return that it gives them (the rate of increase of the net price) is no less than the returns available elsewhere. Equilibrium in the asset market will then imply the realization of the necessary condition mentioned earlier. This simple but convincing theorizing clearly implies that if resource markets are functioning efficiently, there will be a strong association between the rates of change of resource prices and the rates of return on other assets. In particular, as certain commodities (for example, copper, tin, lead and zinc) are exhaustible resources, the theory would predict that in an efficient allocation the rates of change of their prices would be related to rates of return on other assets. Our aim in this paper is to construct and test a series of models of resource markets whose demand and supply functions incorporate the idea that an exhaustible resource is an asset whose rate of price appreciation is a factor determining holding decisions, and which explicitly recognize the possibility of arbitrage between resource markets and markets for other capital assets. The conclusions we reach are very tentative, but suggest that the matter is considerably more complex than simple equilibrium theory would suggest. In particular, the returns to other assets do appear to be important determinants of resource price movements, but it seems to be changes in these returns, rather than their level, that have the greatest influence. There are a variety of possible explanations of this, and we try to discriminate between these in the latter part of the paper. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: Y dt: @attributes: year: 1980 holdings: @attributes: islocal: N |
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