Commodity prices, money and inflation

Inflation-Hedging Portfolios in Different Regimes

“…Commodities exhibit more contrasted behaviour, ie the correlation with inflation is positive in the short run but negative in the long run. This result is consistent with the fact that commodities have a tendency to overreact to money surprises (and therefore inflation) in the short run (Browne and Cronin (2007)), whereas the long-term link with inflation has been weak since the 1980s, when the commodity-consumer price connection seems to have broken down. This reflects the diminished role of traditional commodities in US production and the sterilisation of some inflation signals by offsetting monetary policy actions (Blomberg andHarris (1995), Hooker (2002)).…”

Is there any Link Between Commodity Price and Monetary Policy? Evidence from Australia

“…However, evidence of reverse causation is not found. These results correspond to those found in Hamori (2007), Bloch et al (2006), Browne and Cronin (2007), Sephton (1991) and Garner (1989). Notwithstanding this, our results contradict to those of Ocran and Biekpe (2007).…”

Liquidity and the dynamic pattern of asset price adjustment: A global view

“…Moreover, as argued by Browne and Cronin (2007), the price adjustment process in commodity markets is relatively fast because participants are more equally empowered with more balanced information and resources than their consumer goods counterparts. This enables them to react quickly to changes in monetary conditions.…”