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Trends of Base Metals Prices
Department of Economics, University of Ottawa, Ottawa, Canada
Department of Economics, University of Ottawa, Ottawa, Canada
- 1 Department of Economics, University of Ottawa, Ottawa, Canada
- 2 Department of Economics, University of Ottawa, Ottawa, Canada
Theoretical Economics Letters·Volume 05 (2015)·Pages 531–540·Published 20 July 2015·DOI10.4236/tel.2015.54062
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Abstract
The real price of base metals exhibits a decreasing trend over time. We model base metals prices as the equilibrium of aggregate supply and demand. This allows us to study the effect of determinants of base metals prices. The trend in the price of base metals depends on technological progress, resource scarcity, natural resource taxes, and the interest rate. Under certain parameter restrictions we can explain the decreasing trend in prices over time. This phenomenon is mostly explained by the substitution effect and technological progress. We derive policy implications related to natural resource taxation.
KeywordsBase Metals PricesPrice TrendsHistorical PriceMiningMetals IndustryLMECRS
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