Time: 12:00-13:00 ,  1^st July, 2019(Monday)

Venue: Tongji Building A Room 505

Lecture: The Role of Income and Substitution in Commodity Consumption 

Speaker: John Baffes

Abstract：

The paper reports elasticities based on demand equations for three metal and six energy commodities at individual and aggregate levels. A panel autoregressive distributed lag model was used based on 1965-2017 data for up to 63 countries. The estimates show high degree heterogeneity across commodities, a result consistent with the literature. Including cross-price effect confirms substitutability among several commodities but heterogeneity persists. Estimating the models at aggregate level gives highly significant parameter estimates with expected signs. Long run income elasticities at current median per capita income are close to unity for both aggregates, implying that the plateau stage of commodity consumption, also known as dematerialization hypothesis, is reached at a very slow pace. Numerous control variables were included in the model, intended to capture the countries’ growth orientation and population distribution. The results show that while urbanization is a commodity intensive process, countries with high population density use less commodities than their sparsely populated counterparts. Both individual and aggregate demand equations results we subjected to robustness checks. The former were sensitive to the various specifications; the latter were not.