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How Do World Commodity Prices Affect Asian Commodity Exporting Economies?: The Role of Financial Frictions

Author

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  • Shigeto Kitano

    (Research Institute for Economics and Business Administration, Kobe University, JAPAN)

Abstract

This note examines how recent volatile fluctuations of world commodity prices due to the COVID-19 shock affect Asian commodity exporting economies. Our analysis shows that a drop in world commodity prices has a significant negative impact on output, consumption, and investment of sample countries. However, the impact on trade balance is positive in some countries and negative in others. The difference between these two groups is attributable to whether world commodity prices affect each country's interest rate spreads.

Suggested Citation

  • Shigeto Kitano, 2020. "How Do World Commodity Prices Affect Asian Commodity Exporting Economies?: The Role of Financial Frictions," Discussion Paper Series DP2020-24, Research Institute for Economics & Business Administration, Kobe University, revised Feb 2021.
    • Handle: RePEc:kob:dpaper:dp2020-24
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2020-24.pdf
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    Cited by:

    1. Shigeto Kitano & Kenya Takaku, 2023. "Effect of sovereign wealth funds in commodity‐exporting economies when commodity prices affect interest spreads," Asian Economic Journal, East Asian Economic Association, vol. 37(3), pages 267-292, September.
    2. Qian, Chenqi & Zhang, Tianding & Li, Jie, 2023. "The impact of international commodity price shocks on macroeconomic fundamentals: Evidence from the US and China," Resources Policy, Elsevier, vol. 85(PB).
    3. Alfredo Villca & Alejandro Torres-García, 2023. "Commodity price shocks and the business cycles in emerging economies: the role of banking system balance sheets," Empirical Economics, Springer, vol. 65(5), pages 2039-2063, November.
    4. Karime Chahuán-Jiménez & Rolando Rubilar-Torrealba & Hanns de la Fuente-Mella, 2021. "Market Openness and Its Relationship to Connecting Markets Due to COVID-19," Sustainability, MDPI, vol. 13(19), pages 1-12, October.

    More about this item

    Keywords

    Commodity prices; Asian emerging economies; Financial frictions; SVAR; COVID-19 shock;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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