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Structural changes in metals consumption

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  • Choe, Boum-Jong

Abstract

For 15 years the metals market has been characterized by slow growth - in some cases, even decline - in consumption. To test the proposition that structural changes in demand were the main cause of the slowdown, the author - drawing on U.S. data - uses an extended metals demand model that recognizes energy, labor, capital, and other materials as major inputs. The traditional model explains metals consumption in terms only of output and the prices of metal and its substitutes. It is inadequate to address the issue of structural change because it ignores other factors of production, such as energy, which have experienced dramatic changes. With the extended model, the null hypothesis of no structural change cannot be rejected for most metals. With the conventional model, the null hypothesis of no structural change is strongly rejected. Results with the extended model show that the downturn can be explained mostly by changes in the input variables, particularly such nonmetal inputs as capital and energy, which are much more important cost items than metals and have undergone drastic cost changes over the period.

Suggested Citation

  • Choe, Boum-Jong, 1989. "Structural changes in metals consumption," Policy Research Working Paper Series 180, The World Bank.
    • Handle: RePEc:wbk:wbrwps:180
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    References listed on IDEAS

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    1. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, April.
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    Cited by:

    1. Boum-Jong Choe, 1991. "Global trends in raw materials consumption," Policy Research Working Paper Series 804, The World Bank.
    2. Ronald C. Duncan, 1993. "Agricultural Export Prospects for Sub‐Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 11(1), pages 31-46, March.

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