Revisiting economic and non-economic indicators of natural resources: Analysis of developed economies

Abstract

The determining factors of natural resource volatility are crucial to its practical implication. Although there are numerous factors and indicators of natural resources volatility.However, the most important indicators are yet to explore in case of the developed nations. Unlike other studies, this study investigates various impactful economic and non economic indicators of natural resources in the group of seven economies. From 1990 to 2020, this study employs various econometric techniques, slope coefficient heterogeneity, cross-section dependence, second-generation unit root, and cointegration test. Whereas augmented mean group and the mean group estimators are used as long-run estimators. Specifically, this study uses GDP, energy-related inflation, globalization, and human capital index as a set of explanatory variables. The empirical outcomes demonstrate all the study variables are cointegrated. Also, three variables: GDP, energy-related inflation, and human capital, are significantly and positively associated with natural resources volatility. Where an increase in each of these variables substantially promotes natural resources. In contrast, globalization is negatively associated with natural resources volatility. These results are robust, as confirmed by the fully modified ordinary least square, dynamic ordinary least square, and common correlated effect mean group. Following empirical findings, this study commends policies regarding the regulation of energy-related inflation, revising policies regarding globalization, and enhancing human capital such as education and technical skills to enhance natural resources rents.