MEASURING THE TRENDS OF NATURAL-RESOURCE COMMODITY PRICES - AN EMPIRICAL-ANALYSIS

It is believed that over time the price path of exhaustible recources would form a U-shape. Initially prices will show a downward trend due to technological progress in extraction, followed by a price rising trend due to increasing scarcity of resources. Using the optimality theorem, this study investigates the availability of nonrenewable natural resources and examines the possible shape of their price paths for the period of 1870 to 1987. The analysis, using the linear and quadratic trend model, supports the U-shaped hypothesis of increasing resource scarcity.