Increasing economic uncertainty in China has a big effect on commodity prices. Alternative data can help investors to measure that uncertainty, but what is the best technique? While the most popular method is economic policy uncertainty, in this review we look at a paper demonstrating that Chinese macroeconomic uncertainty provides a better way to predict returns and volatility in the commodity market.

LITERATURE

In this literature review, we summarise “The dynamic connectedness between macroeconomic uncertainty and commodity volatility: evidence from China”. This paper is co-authored by Xiaopeng Zou and Jiawei Hu of Zhejiang University and published in Applied Economics in January 2024.

QUICK VIEW

• This paper explores the impact of macroeconomic uncertainty and economic policy uncertainty on commodity markets to identify the main influences on commodities.