Social and Behavioral Sciences Commons^™

(Wp 2011-07) Factoring Emerging Markets Into The Relationship Between Global Liquidity And Commodities, Steven Landgraf, Abdur Chowdhury

Abdur R. Chowdhury

What caused the mid-2000s world commodity price “bubble” and the recent commodity price growth during the economic recovery after the 2007-2009 recession? The classical “supply and demand” interpretation offered by some observers suggests that rapid global industrial growth over the past decade – the so-called “demand channel” – is the key driver of price growth. Others have argued that recent bouts of commodity price growth were directly related to central banks, especially the U.S. Federal Reserve, injecting too much money or “liquidity” into the financial system. They assert that high commodity prices are a result of excessively loose monetary policy. …