The world zinc industry

else’s can be used to systematically forecast the price of zinc or any other commodity - and the sooner potential buyers of this kind of econometric output become aware of this reality, the better it will be for all serious economists. What econometrics can do is to verify the importance accorded to certain variables or configurations of variables by theoretical analysis. Thus other econometric studies (eg those of Gupta’s study represents an important Burrows, Desai, etc). continuation of the work begun by The book goes astray only on those Professor Franklin Fisher in which the few occasions when the author leaves key role of the consumption-inventory the humdrum of conventional econoratio for price formation was first metric modelhng and attempts to liven emphasized. up his analysis. The material on pages It is apparent from this book that 9698 and 100, for example, is Satyadev Gupta is a commodity completely superfluous, and should economist of the very highest calibre, have been relegated to an appendix. and his capacity for both descriptive That brings us to the econometric economics and primary commodity model proper. Figure 4-3 is obviously econometrics is extremely impressive. an extension of the scheme I employed The only real shortcoming of this study in my short paper ‘An econometric is the absence of rigorous -or even note on the demand for refined zinc’. * semi-rigorous - theoretical analysis. However, Gupta’s construction is For instance, there is no attempt to much more complete and, in contrast model the market for secondary metal. to my modest efforts, he has estimated and I would have appreciated seeing just about everything there is to be short-run pricing discussed in terms of estimated. For example, his model an explicit stock-flow model. includes an almost complete catalogue Let me sum up this review by saying of demand and supply functions, most that I recommend Gupta’s book to of them with admirable statistical anyone interested in the markets for properties. The problem is that these metals and minerals, regardless of their equations do not really tell us anything background or training. that we did not already know. Moreover, with all due respect to Dr Ferdinand E. Banks Gupta, his models cannot be used for Nationalekonomiska Institutionen forecasts. And how do I know this? I Uppsala University, Sweden know it because there are no commodity models of any market that can be used for this purpose. The variable that everyone is curious about, ‘F.E. Banks, ‘An econometric note on the of course, is price; but neither Gupta’s demand for refined zinc’, Zeitschriff fiir Nationabkonomi, 1971. price equation, mine, nor anybody

Book reviews

Comprehensive econometric model for zinc THE WORLD ZINC INDUSTRY by Satyadev

Gupta

Lexington Books, D. C. Heath, Lexington, MA (UK: Gower, Aldershot, Hants) l982,205pp, E18.50 This is an interesting and, for the most part, easily read book. It assembles under one cover a great deal of useful information about the world zinc industry, and, as far as I can tell, most of the story is correct. The econometric analysis, while as sterile as most of these exercises, is well placed - which means that it does not interfere with the rest of the exposition. First, the positive side of this book. It contains probably the best available overview of this particular industry. Figure 3-1, which shows the corporate structure of the world zinc industry, is extremely useful and there is an excellent outline of pricing in zinc markets. Gupta also has the stock effects right, although in his ‘model’ I find his discussion of the formation of the free market price of zinc less than satisfactory. There is a long and valuable table showing the structure of the Canadian, Australian and European zinc industries, and in conjunction with his econometric work Gupta has provided short but useful reviews of some

Limitations of econometrics COPPER IN ZAMBIA An economic analysis by C.F. Obidegwu and M. Nziramasanga D. C. Heath, Lexington Books, Lexington, MA (UK: Gower, Aldershot, Hants) 1981, f18.50

RESOURCES

This book contains an econometric study of the Zambian economy. Its objective is to trace the impact of the copper sector on Zambian economic performance. For this purpose, the authors construct a detailed copper sector submodel that they embed in a model of the macroeconometric national economy. The major links

POLICY September 1982

between the two models consist of the foreign exchange earnings and fiscal revenue generated by the copper and expended by other industry, sectors in the economy, and of the copper industry’s payments to domestic factors of production. Annual data, mostly for the period 1924-76, are employed in the estimations. model is predominantly The employed for historical period simulations and not for forecasts of the future.

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