Trends in real commodity prices: How real is real?

Testing for the existence of downward trends in real commodity prices has been the focus of several studies since the Prebisch–Singer hypothesis was formulated back in 1950. In this article, we focus on annual and monthly series of various commodity categories and consider alternative price deflators. Based on the methodology of Harvey et al. (2010), which is robust to the order of integration of the time series, we conclude that the time frequency and the price deflators play a key role when testing for the Prebisch–Singer hypothesis. For instance, at an annual frequency (1900–2003, 1900–2008), it becomes considerably more likely to support it when deflating by the unadjusted US CPI-all items than when deflating by the Manufactures Unit Value (MUV) Index or the Historical Price Index of Manufactures (HPIM). This finding is in agreement with the Svedberg and Tilton (2006) discussion on the CPI's overestimation of inflation and the measurement of the real price of copper. When dealing with monthly data (January 1957–December 2010), our results show that real prices tend not to reject the null hypothesis of a trendless series, except when deflating by the PPI-Crude Materials and, to a lesser extent, by the HPIM.     

A simple mineral market model: Can it produce super cycles in prices?

This paper develops a stylized supply–demand model for a mineral/nonrenewable commodity. It embodies important distinctions between short-run and long-run mineral supply and the derived demand for minerals as intermediate goods in production sectors with differing intensities of use. This framework is used to address the question: under what conditions might one expect to observe super cycles (i.e. cycles with a period of 20–70 years) in minerals prices? A plausible time path for GDP$GDP$ growth and the structural transformation that accompanies economic development in an emerging region is specified. Using these drivers and reasonable supply and demand parameters, price dynamics are simulated. The result is an asymmetric price cycle with a peak price that is about 250% above trend and an expansion phase that lasts for about 20 years. Thus, this simple model is capable of producing a single cycle with a frequency and amplitude in the range estimated in the empirical literature on super cycles. As other regions reach the development ‘take-off' phase, additional super cycles should emerge.     

Is risk-sharing resource taxation in society's best interests if prices are log-normally distributed?

This paper contributes to our understanding of the perceived benefits for society of risk-sharing resource taxation. In the particular context of log-normally distributed prices a model is developed which enables comparison of risk-sharing resource taxation with an alternative in determining the overall return to society from auctioning an extraction lease. The main finding of the paper is a potential exception to the general preference for risk-sharing resource taxation if the bidding firms are effectively risk neutral. This exception is illustrated numerically in the context of the impact of increased price uncertainty, but it is shown not to be robust with respect to divergences from risk neutrality in the risk attitudes of firms. Consequently, it is concluded that the choice of risk-sharing resource taxation is likely to be in society's best interests, regardless of the probability distribution of prices.     

Is love of nature in the US becoming love of electronic media? 16-year downtrend in national park visits explained by watching movies,playing video games,internet use,and oil prices

After 50 years of steady increase, per capita visits to US national parks have declined since 1988. This decline, coincident with the rise in electronic entertainment media, may represent a shift in recreation choices with broader implications for the value placed on biodiversity conservation and environmentally responsible behavior. We compared the decline in per capita visits with a set of indicators representing alternate recreation choices and constraints. The Spearman correlation analyses found this decline in NPV to be significantly negatively correlated with several electronic entertainment indicators: hours of television, (rs=-0.743, P<0.001), video games (rs=-0.773, P<0.001), home movies (rs=-0.788, P<0.001), theatre attendance (rs=-0.587, P<0.025) and internet use (rs=-0.783, P<0.001). There were also significant negative correlations with oil prices (rs=-0.547, P<0.025), foreign travel (rs=-0.452, P<0.05), and Appalachian Trail hikers (rs=-0.785, P<0.001). Income was significantly positively correlated with foreign travel (rs=0.621, P<0.005) but negatively correlated with national park visits (rs=-0.697, P<0.005). There was no significant correlation of mean number of vacation days, indicating available vacation time is probably not a factor. Federal funding actually increased during this period, and so was rejected as a probable factor. Park capacity was rejected as limiting since both total overnight stays and visits at the seven most popular parks rose well into the mid-1990s. Aging of baby boomers was also rejected as they are only now reaching retirement age, and thus during the period of visitation decline were still of prime family vacation age. Multiple linear regression of four of the entertainment media variables as well as oil prices explains 97.5% of this recent decline (r=0.975, multiple r2=0.950, adjusted multiple r2=0.925, SE=0.015, F=37.800, P<0.0001). We may be seeing evidence of a fundamental shift away from people's appreciation of nature (biophilia, Wilson 1984) to 'videophilia,' which we here define as "the new human tendency to focus on sedentary activities involving electronic media." Such a shift would not bode well for the future of biodiversity conservation.