Chinese Resource Demand and the Natural Resource Supplier

CAMA working paper no 54/2013

27 Pages Posted: 21 Aug 2013

See all articles by Mardi H. Dungey

Mardi H. Dungey

University of Tasmania (deceased); Financial Research Network (FIRN) (deceased)

Renee Fry-McKibbin

Australian National University (ANU) - Crawford School of Public Policy; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA), Crawford School of Public Policy

Verity Linehan

Australian National University

Date Written: June 1, 2013

Abstract

This paper 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 resources exports sector. The key findings of the paper 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 resources sector. However, these shocks eventually lead to lower real domestic output with factors of production moving out of the non-resources sectors and into the resources sector, resulting in a fall in nonresource sector output which is not fully offset by the rise in resources sector output. The results also indicate some market power by the natural resource supplier.

Suggested Citation

Dungey, Mardi H. and Fry-McKibbin, Renee and Linehan, Verity, Chinese Resource Demand and the Natural Resource Supplier (June 1, 2013). CAMA working paper no 54/2013, Available at SSRN: https://ssrn.com/abstract=2312836 or http://dx.doi.org/10.2139/ssrn.2312836

Mardi H. Dungey

University of Tasmania (deceased)

Financial Research Network (FIRN) (deceased)

Renee Fry-McKibbin (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA), Crawford School of Public Policy ( email )

Canberra, Australian Capital Territory 0200
Australia

Verity Linehan

Australian National University ( email )

Canberra, Australian Capital Territory 2601
Australia

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