| Commodity prices will eventually shed all their gains from the China boom as new supplies and new technologies bring supply and demand back into balance. This finding, contained in academic research presented at the recent American Economics Association conference, is much more pessimistic than implied by the new forecasting methods adopted by Treasury, which assume that Australia's terms of trade (export prices compared with import prices) will settle at a level 40 per cent higher than their long-term average and remain there at least until 2030.
Estimating the probable path of export prices has been the most vexed forecasting problem for Treasury over the past decade...............................................Full Article: Source
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