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Martin Stuermer

Senior Research Economist
Federal Reserve Bank of Dallas

Martin StuermerMartin Stuermer is a senior research economist at the Federal Reserve Bank of Dallas. His research interests are macroeconomics with a focus on energy, commodities and natural resources. He studies the fluctuations and trends in energy and mineral commodity markets from a long-run perspective by using time-series econometrics and growth models. In his position he briefs the Bank's president on energy for the FOMC meetings. He joined the Dallas Fed in July 2014 and holds a PhD in economics from the University of Bonn.



What Drives Commodity Price Booms and Busts? (with David Jacks) Energy Economics, forthcoming
What drives commodity price booms and busts? We provide evidence on the dynamic effects of commodity demand shocks, commodity supply shocks, and inventory demand shocks on real commodity prices. In particular, we analyze a new data set of price and production levels for 12 agricultural, metal, and soft commodities from 1870 to 2013. We identify differences in the type of shock driving prices of the various types of commodities and relate these differences to commodity types which reflect differences in long-run elasticities of supply and demand. Our results show that demand shocks strongly dominate supply shocks.

150 Years of Boom and Bust: What Drives Mineral Commodity Prices?, Macroeconomic Dynamics, forthcoming.
This paper provides long-run evidence on the dynamic effects of supply and demand shocks on commodity prices. I assemble and analyze a new data set of price and production levels of copper, lead, tin, and zinc from 1840 to 2014. Using a novel approach to identification, I show that price fluctuations are primarily driven by demand, rather than supply shocks. Demand shocks affect the price for up to 15 years, whereas the effect of mineral supply shocks persists for up to 5 years. Price surges caused by rapid industrialization are a recurrent phenomenon throughout history. Mineral commodity prices return to their declining or stable trends in the long run.

Industrialization and the Demand for Mineral Commodities Journal of International Money and Finance, vol. 76, pp. 16-27, September 2017.
This paper uses a new data set that begins in 1840 to investigate how industrialization affects the derived demand for mineral commodities. I establish that there is substantial heterogeneity in the long-run effect of manufacturing output on demand across five commodities. A one percent increase in per capita manufacturing output leads to an approximately 1.5 percent increase in aluminum demand and a roughly 1 percent rise in copper demand. Estimated elasticities for lead, tin, and zinc are below unity. My results suggest that the experience of Japan and South Korea’s industrialization, for example, may be used to infer the impact of China’s industrialization on future demand for metals. The results imply substantial differences across commodities with regard to future demand. Adjustment to equilibrium takes 7–13 years, which helps explain the long duration of commodity price fluctuations.

Working Papers

Non-Renewable Resources, Technological Change and Endogenous Growth (joint work with Gregor Schwerhoff, MCC Berlin) | Online Appendix
We add an extractive sector to an endogenous growth model of expanding varieties and directed technological change. Firms increase their economically extractable stocks of non-renewable resources through R&D investment in extraction technology and reduce their stocks through extraction. We show how the geological distribution of the non-renewable resource interacts with technological change. Our model accommodates long-term trends in non-renewable resource markets—namely stable prices and exponentially increasing extraction—for which we present data going back to 1792. The model suggests that over the long term, development of new extraction technologies neutralizes the increasing demand for non-renewable resources in industrializing countries such as China.

Work in Progress

Collusion in Commodity Markets: A Long-Run Perspective (joint work with Gordon Rausser, UC Berkeley)
Over the course of the last century and a half there have been many attempts to cartelize world commodity markets, sometimes orchestrated by national governments and other times by dominant firms in the industry. Utilizing a newly constructed data set on four commodity markets, over a long history, 1840 to 2013, we investigate the dynamic properties of collusion or cartel behavior. For each of the identified collusive periods, 9 for copper, 15 for tin, 12 for zinc, and 6 for lead, we determine the cartel price distortion, comparing actual prices to computed but-for prices, the latter determined by a structural VAR model including world GDP, world production of the respective commodity and its world determined prices. From such computed overcharges we estimate market wide economic damages to consumers of the four commodities. Each of the alleged collusive periods also are found to differ in accordance with the mechanisms controlling supply either through output restrictions and/or stock accumulations. Based on the empirical results we are able to isolate the systematic evolution of collusive conduct as well as the length of time before defection undermines the effectiveness of the cartel.

Selected Policy Papers

  • “Demand Shocks Fuel Commodity Price Booms and Busts,” Economic Letter, vol. 12, no. 14, 2017
  • “OPEC Extends Cuts, Opening Door for U.S. to Gain Further Market Share,“ (with Grant Strickler) Quarterly Energy Update, no. 4, 2017.
  • “OPEC Reloaded: More Appearance than Substance?” (with Rachel Brasier) Quarterly Energy Update, no. 4, 2016”
  • “Oil Roller Coaster: Prices Rise on Production Outages, Fall with Brexit,” (with Navi Dhalival) Quarterly Energy Update, no. 2, 2016.
  • “OPEC Likely to Keep Pumping Even as Some Members Confront Budget Woes,” with Navi Dhaliwal, Federal Reserve Bank of Dallas Southwest Economy, Fourth Quarter 2015.
  • “Oil Markets Stabilizing, but OPEC Supply Raises Concerns,” Federal Reserve Bank of Dallas Quarterly Energy Update, Second Quarter 2015.
  • “OPEC Tips Crude Oil Markets Over the Cliff,” with Navi Dhaliwal, Federal Reserve Bank of Dallas Quarterly Energy Update, Fourth Quarter 2015.
  • “The Impact of the BRIC Countries on Mineral Commodity Markets,” (in German) with Juergen von Hagen, DERA Rohstoffinformationen, No. 11, German Federal Mineral Resource Agency, Berlin, 2012.
  • “Policy Measures of the BRIC Countries to Secure the Supply of Mineral Resources. The Example of Copper,” (in German) with Juergen von Hagen, DERA Rohstoffinformationen, No. 12, German Federal Mineral Resource Agency, Berlin, 2012.
  • “An Overview of Geological Resources in Sub-Saharan Africa: Potential and Opportunities for Tax Revenue from the Extractive Sector,” with Peter Buchholz, Runge, J. and Shikwati, J. (Eds.), in Geological Resources and Good Governance in Sub-Saharan Africa: Holistic Approaches to Transparency and Sustainable Development in the Extractive Sector, Routledge Chapman & Hall, London, 2011.
  • “Export Barriers in Steelmaking Raw Material Markets,” background paper prepared for the OECD Steel Committee Meeting, Paris, May 6–7, 2010.
  • “Let the Good Times Roll? Raising Tax Revenues from the Extractive Sector in Sub-Saharan Africa During the Commodity Price Boom,” Discussion Paper, no. 7, German Development Institute, 2010.
  • “The International Raw Materials Boom. A Challenge for Multilateral Trade Policy,” International Politics and Society, no. 2, 2008, pp. 126–39.
  • “Climate Change Impacts on Business,” with David Downie, background paper prepared for the Global Roundtable on Climate Change, Nov 14–15, Columbia University, New York City.

Curriculum Vitae

Martin Stuermer