@article{Keay:274022,
      recid = {274022},
      author = {Keay, Ian},
      title = {The Impact of Commodity Price Volatility on Resource  Intensive Economies},
      address = {2010-12},
      number = {2110-2018-4403},
      series = {Working Paper No. 1274},
      pages = {46},
      year = {2010},
      abstract = {Commodity price volatility is bad for macroeconomic  performance. Virtually all empirical studies that document  this negative relationship rely on the estimation of  aggregate growth equations using cross-section evidence  drawn from the post-1970 era. This paper uses a simulation  model based on the structure of a dynamic renewable  resource model of optimal extraction to determine why  commodity price volatility affects investment decisions,  production levels, profitability, and ultimately long run  growth. The Canadian forestry sector is used as a case  study to assess the relative strength of each of these  effects. Simulation exercises reveal that commodity price  volatility shocks significantly reduce resource firms'  equity prices and their demand for reproducible and natural  capital. As a result of these changes in the firms'  external financing costs and investment incentives,  extraction costs rise, output levels and profits fall, and  real GDP per capita growth slows.},
      url = {http://ageconsearch.umn.edu/record/274022},
      doi = {https://doi.org/10.22004/ag.econ.274022},
}