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| Title: | The Great Financial Crisis, Commodity Prices and Environmental Limits |
| Authors: | Lopez, Ramon E. |
| Issue Date: | 2009-05 |
| Series/Report no.: | Working Paper
09-02 |
| Abstract: | This paper examines how certain new structural factors have contributed to the latest
great financial crisis and world recession of 2008-09. We focus on three of these
structural factors: (i) the incorporation of highly populated countries into the growth
process; (ii) The increasing scarcity of the environment and certain natural resources; (iii)
the unprecedented concentration of wealth and income in the advanced economies over
the last three decades. These structural changes have significantly tightened the links
between world growth and commodity prices, have made the world commodity supply to
become increasingly inelastic, and have made growth to become more dependent on lax
monetary policies, respectively. All this may make the recovery from the current crisis
much more difficult, implying a deeper and more protracted crisis than most previous
crises. With this framework in mind we focus on the likely affect of the financial crisis
upon the natural resources in the developing world, by drawing implications from the
1995 Mexico-originated Peso crisis and the 1998-99 Asia crises. We find that the impact
of the current crisis is likely to degrade further the environmental resources and the
tightening of environmental policies in response to such degradation may make the
commodity supply curve of commodities even steeper in the future. |
| URI: | http://purl.umn.edu/51987 |
| Institution/Association: | University of Maryland>Department of Agricultural and Resource Economics>Working Papers |
| Total Pages: | 72 |
| Collections: | Working Papers
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| 09-02.pdf | | 1248Kb | PDF | View/Open |
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