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Natural resource prices: will they ever turn up?

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  • Berck, Peter
  • Roberts, Mike

Abstract

Hotelling's theory predicts that natural resource rents should increase over time. However, technical progress in resource extraction, environmental constraints,or great natural abundance could result in stagnant or declining product prices. Thus, there is no theoretical reason to believe that product prices will rise in the near future. The prediction of product prices by time-series methods is shown to depend critically upon whether the series are modeled as differenced or trend stationary. Dickey-Fuller and Lagrange Multiplier tests are used to show that the series are differenced stationary. Long- and short-sample series are tested. Trend-stationary modeling strongly predicts rising resource prices. The result from differenced-stationary modeling is that there is only a weak supposition that natural resource prices will rise.

Suggested Citation

  • Berck, Peter & Roberts, Mike, 1995. "Natural resource prices: will they ever turn up?," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt75g2c8g8, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt75g2c8g8
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    References listed on IDEAS

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    5. repec:cdl:ucsbec:13-89 is not listed on IDEAS
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