The commodity cycle: macroeconomic and financial stability implications (2015-16)

This research network focused on:

  • The interaction between the commodity cycle and the real cycle. Commodities and investment (contribution to GDP growth and potential growth); commodity booms and sectoral composition of growth (Dutch disease); commodity booms and overestimation of potential output (both as overstating component of growth potential and inducing real and financial imbalances which end up in economic adjustment).
  • Financial aspects of the commodity cycle. Vulnerabilities associated with the commodity cycle (for example, leverage of commodity producers/exporters and implications of a cycle reversal, financial inflow booms and busts, commodity prices and exchange rates, and the resulting spillovers to the domestic financial sector); commodity prices and foreign reserves or foreign asset holdings (public and private). A corollary to this second theme is the implication of these financial aspects for real activity and monetary policy responses.

Professor Joshua Aizenman was the academic adviser for this network.

Several contributions from the network's researchers were published in a special section of the Journal of International Money and Finance. Read the introduction to the special section and find all the published articles at the bottom of this page.


Workshop on "The commodity cycle: macroeconomic and financial stability implications", Mexico City, 29-30 October 2015

Closing conference: "The commodity cycle: macroeconomic and financial stability implications", Mexico City, 18-19 August 2016


The dynamics of investment projects: evidence from Peru by Rocío Gondo and Marco Vega

Commodity price risk management and fiscal policy in a sovereign default model by Bernabe Lopez-Martin, Julio Leal and Andre Martinez Fritscher

Volatility risk premia and future commodities returns by José Renato Haas Ornelas and Roberto Baltieri Mauad

Business cycles in an oil economy by Drago Bergholt, Vegard H Larsen and Martin Seneca

Oil, equities, and the zero lower bound by Deepa Datta, Benjamin K Johannsen, Hannah Kwon and Robert J Vigfusson

Macro policy responses to natural resource windfalls and the crash in commodity prices by Frederick van der Ploeg