Chinese resource demand and the natural resource supplier

Verity Linehan, Renee Fry-McKibbin, Mardi Dungey

    Research output: Contribution to journalArticle

    Abstract

    This article provides empirical evidence on the effects of Chinese resource demand on the resource-rich natural resource supplier using the example of Australia. A structural VAR model is used to examine the effects of Chinese resource demand, commodity prices and foreign output on the macroeconomy with a formally specified mining and resource export sector. The key findings of the article are that shocks to Chinese demand and commodity prices result in a sustained increase in commodity prices and mining investment and a positive impact on the resource sector. However, these shocks eventually lead to lower real domestic output with factors of production moving out of the nonresource sectors and into the resource sector, resulting in a fall in nonresource sector output which is not fully offset by the rise in resource sector output. The results also indicate some market power by the natural resource supplier.
    Original languageEnglish
    Pages (from-to)167-178
    JournalApplied Economics
    Volume46
    Issue number2
    DOIs
    Publication statusPublished - 2014

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