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Non-renewable resource extraction over the long term: empirical evidence from global copper production

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  • Martin Stuermer

    (International Monetary Fund, Research Department)

Abstract

Global mine production of copper has risen more than 80 times over the last 135 years. What were the main drivers? I examine this question based on copper market data from 1880 to 2020. I employ a structural time series model with sign restrictions to identify demand and supply shocks. I find that a deterministic trend drives most of the output growth. At the same time, unpredictable demand and supply shocks caused substantial fluctuations around the trend. A global commodity demand shock that is, for example, linked to a 3% unexpected expansion of the global economy due to rapid industrialization causes a 10% rise in the real copper price, incentivizing a 5% increase in global copper production. This provides empirical evidence for the feedback control cycle of mineral supply.

Suggested Citation

  • Martin Stuermer, 2022. "Non-renewable resource extraction over the long term: empirical evidence from global copper production," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 35(3), pages 617-625, December.
    • Handle: RePEc:spr:minecn:v:35:y:2022:i:3:d:10.1007_s13563-022-00352-0
    DOI: 10.1007/s13563-022-00352-0
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    More about this item

    Keywords

    Structural vector autoregression; Copper production; Non-renewable resources; Metals;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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