The Role of Income and Substitution in Commodity Demand

The Role of Income and Substitution in Commodity Demand

This paper presents estimates of time-varying income elasticities of demand for energy and metal commodities. The analysis finds that the elasticities are close to unity, evaluated at world median per capita income levels. Furthermore, the estimate...

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Main Authors: Baffes, John, Kabundi, Alain, Nagle, Peter
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2020
Subjects:
COMMODITY CONSUMPTION
COMMODITY INTENSITY
ENERGY DEMAND
METAL DEMAND
SUBSTITUTION
SUBSTITUTABILITY
INCOME ELASTICITY
Online Access:http://documents.worldbank.org/curated/en/433811579795110765/The-Role-of-Income-and-Substitution-in-Commodity-Demand
http://hdl.handle.net/10986/33257
id okr-10986-33257
recordtype oai_dc
spelling okr-10986-332572022-09-20T00:12:42Z The Role of Income and Substitution in Commodity Demand Baffes, John Kabundi, Alain Nagle, Peter COMMODITY CONSUMPTION COMMODITY INTENSITY ENERGY DEMAND METAL DEMAND SUBSTITUTION SUBSTITUTABILITY INCOME ELASTICITY This paper presents estimates of time-varying income elasticities of demand for energy and metal commodities. The analysis finds that the elasticities are close to unity, evaluated at world median per capita income levels. Furthermore, the estimates confirm that as income rises, demand growth for industrial commodities slows and eventually plateaus. Indeed, estimates for aggregate metals and energy differ by an order of magnitude throughout the income spectrum: from a low of 0.2 for advanced economies to nearly 2 for low-income countries. The analysis, which accounts for substitutability by estimating group aggregates as well as individual commodities with cross-price effects, is based on a panel autoregressive distributed lag model covering 1965-2018, for up to 63 countries. 2020-01-30T15:57:35Z 2020-01-30T15:57:35Z 2020-01 Working Paper http://documents.worldbank.org/curated/en/433811579795110765/The-Role-of-Income-and-Substitution-in-Commodity-Demand http://hdl.handle.net/10986/33257 English Policy Research Working Paper;No. 9122 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic COMMODITY CONSUMPTION
COMMODITY INTENSITY
ENERGY DEMAND
METAL DEMAND
SUBSTITUTION
SUBSTITUTABILITY
INCOME ELASTICITY
spellingShingle COMMODITY CONSUMPTION
COMMODITY INTENSITY
ENERGY DEMAND
METAL DEMAND
SUBSTITUTION
SUBSTITUTABILITY
INCOME ELASTICITY
Baffes, John
Kabundi, Alain
Nagle, Peter
The Role of Income and Substitution in Commodity Demand
relation Policy Research Working Paper;No. 9122
description This paper presents estimates of time-varying income elasticities of demand for energy and metal commodities. The analysis finds that the elasticities are close to unity, evaluated at world median per capita income levels. Furthermore, the estimates confirm that as income rises, demand growth for industrial commodities slows and eventually plateaus. Indeed, estimates for aggregate metals and energy differ by an order of magnitude throughout the income spectrum: from a low of 0.2 for advanced economies to nearly 2 for low-income countries. The analysis, which accounts for substitutability by estimating group aggregates as well as individual commodities with cross-price effects, is based on a panel autoregressive distributed lag model covering 1965-2018, for up to 63 countries.
format Working Paper
author Baffes, John
Kabundi, Alain
Nagle, Peter
author_facet Baffes, John
Kabundi, Alain
Nagle, Peter
author_sort Baffes, John
title The Role of Income and Substitution in Commodity Demand
title_short The Role of Income and Substitution in Commodity Demand
title_full The Role of Income and Substitution in Commodity Demand
title_fullStr The Role of Income and Substitution in Commodity Demand
title_full_unstemmed The Role of Income and Substitution in Commodity Demand
title_sort role of income and substitution in commodity demand
publisher World Bank, Washington, DC
publishDate 2020
url http://documents.worldbank.org/curated/en/433811579795110765/The-Role-of-Income-and-Substitution-in-Commodity-Demand
http://hdl.handle.net/10986/33257
_version_ 1764478334165581824

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