Economics, Econometrics and Finance
3 years ago

International Stock Index Accurately Predicts Base Metal Prices, Boosting Economic Forecasts.

MPRA Paper
Forecasting Base Metal Prices with an International Stock Index
Pablo Pincheira, Nicolás Hardy, Andrea Bentancor, Cristóbal Henriquez, Ignacio Tapia

Paper Summary

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The MSCI ACWI Metals and Mining Index can predict base metal prices. By using this index, forecasts are more accurate compared to those that do not include it. This is because the stock prices of metal and mining producers are influenced by the prices of the commodities they produce and export. The present-value model for stock-price determination supports this idea, showing that stock prices can impact their key determinants.