Report
The “factor price frontier” after a shock to commodity prices
Since the start of 2021, OECD countries have experienced a very drastic rise in commodity prices. It is important to bear in mind what this rise in commodity prices entails. A t equilibrium, the economy must be at the “production factor price frontier”. If the relative price of commodities rises, then inevitably: Either the real return on capital falls (in this case capital is substituted for commodities); Or the return on labour falls (in which case labour is substituted for commodities). It is impossible to avoid both consequences of a rise in the relative price of commodities: at best , one is traded off for the other . For the time being, we see that real wages in particular have fallen, even more so in the United States than in the euro zone, unlike the real return on capital.
Provider
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.