Commodity prices and global economic activity: A derived-demand approach

We propose a derived-demand approach to explain the positive correlation and synchronicity between growth rates of commodity prices economic activity at global level. Our focus is on important traded commodities, which supply function very price inelastic in short run, such as oil major metal commodities. contributions are follows. first show oil-price cycles using tools common-feature literature. Second, we how improve forecasts prices, noting that observe latter an almost continuous-time basis, but former much lower frequency with considerable delay. Third, usefulness optimal forecast combinations for employing wide array macroeconomic financial variables. The out-of-sample R2 statistic model can reach up about 14%, improvement over previous