Effects of mineral-commodity price shocks on monetary policy in developed countries

Atsushi Sekine*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


This article investigates effects of changes in mineral commodity prices on monetary policy. Using macroeconomic data from three mineral-producing countries (Australia, Canada and New Zealand) and two non-mineral-resource countries (USA and UK), I estimate the impulse response functions of the policy interest rates and the core consumer price index (CPI) inflation rates to mineral-commodity price shocks. I find that the central banks in both groups of the examined countries significantly respond to mineral-commodity price shocks. In responses to an unexpected 10% increase in mineral commodity prices, the central banks are estimated to increase their policy interest rates by approximately 0.8 percentage points. Moreover, the central banks seem to take anticipatory policy reactions to control core CPI variations triggered by these shocks. Thus, mineral commodity prices would act as important determinants of the monetary policies in both groups of the examined countries. These findings would be useful for analysing Taylor rules in their countries. However, effects of the increase in their policy interest rates on core CPI inflation cannot be identified for the examined countries.

Original languageEnglish
Pages (from-to)3332-3346
Number of pages15
JournalApplied Economics
Issue number31
Publication statusPublished - 2015 Jul 3
Externally publishedYes


  • counterfactual analysis
  • impulse responses
  • mineral commodity prices
  • response decompositions
  • structural vector autoregressions

ASJC Scopus subject areas

  • Economics and Econometrics


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