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Lower Bulk Commodity Prices and Their Effect on Economic Activity

Author

Listed:
  • Adam Gorajek

    (Reserve Bank of Australia)

  • Daniel Rees

    (Reserve Bank of Australia)

Abstract

Recent declines in bulk commodity prices have reduced the growth of household income, company profits and government revenues. The declines have been associated with a contraction in mining investment and, by lowering the growth of aggregate demand, have restrained non-mining business investment. At the same time, a number of factors are helping to offset the effects of declining commodity prices. These include accommodative monetary policy and the depreciation of the exchange rate. Also, after saving some of the mining boom proceeds, households appear to be reducing their rates of saving to maintain consumption.

Suggested Citation

  • Adam Gorajek & Daniel Rees, 2015. "Lower Bulk Commodity Prices and Their Effect on Economic Activity," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 31-38, September.
    • Handle: RePEc:rba:rbabul:sep2015-04
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2015/sep/pdf/bu-0915-4.pdf
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    References listed on IDEAS

    as
    1. Daniel Rees, 2013. "Terms of Trade Shocks and Incomplete Information," RBA Research Discussion Papers rdp2013-09, Reserve Bank of Australia.
    2. Kulish, Mariano & Rees, Daniel M., 2017. "Unprecedented changes in the terms of trade," Journal of International Economics, Elsevier, vol. 108(C), pages 351-367.
    3. Peter Tulip, 2014. "The Effect of the Mining Boom on the Australian Economy," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 17-22, December.
    4. Michael Plumb & Christopher Kent & James Bishop, 2013. "Implications for the Australian Economy of Strong Growth in Asia," RBA Research Discussion Papers rdp2013-03, Reserve Bank of Australia.
    5. Vanessa Rayner & James Bishop, 2013. "Industry Dimensions of the Resource Boom: An Input-Output Analysis," RBA Research Discussion Papers rdp2013-02, Reserve Bank of Australia.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kris Ivanovski & Sefa Awaworyi Churchill & Ahmed Salim Nuhu, 2020. "Modelling the Australian J‐Curve: An ARDL Cointegration Approach," Economic Papers, The Economic Society of Australia, vol. 39(2), pages 167-184, June.
    2. Kathryn Davis & Martin McCarthy & Jonathan Bridges, 2016. "The Labour Market during and after the Terms of Trade Boom," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 1-10, March.

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