Abstract: The energy transition requires substantial amounts of metals, including copper, nickel, cobalt, and lithium. Are these metals a bottleneck? We identify metal-specific demand shocks, estimate supply elasticities, and study the price impact of the transition in a structural scenario analysis. Prices of these four metals would reach previous historical peaks but for an unprecedented, sustained period in a net-zero emissions scenario, potentially derailing the energy transition. Their production value would rise nearly four-fold to USD 11 trillion for the period 2021 to 2040. These four metals markets alone could become as important to the global economy as the oil market.
Qualitative versus Quantitative External Information for Proxy Vector Autoregressive Analysis (with Helmut Lütkepohl)
Abstract: A major challenge for proxy vector autoregressive analysis is the construction of a suitable external instrument variable or proxy for identifying a shock of interest. Some authors con- struct sophisticated proxies that account for the dating and size of the shock while other authors consider simpler versions that use only the dating and signs of particular shocks. It is shown that such qualitative (sign-)proxies can lead to impulse response estimates of the impact effects of the shock of interest that are nearly as efficient as or even more ef- ficient than estimators based on more sophisticated quantitative proxies that also reflect the size of the shock. Moreover, the sign-proxies tend to provide more precise impulse re- sponse estimates than an approach based merely on the higher volatility of the shocks of interest on event dates.