[PDF] Stabilizing Speculative Commodity Markets eBook

Author : S. Ghosh
Publisher : Oxford University Press, USA
Page : 466 pages
File Size : 12,22 MB
Release : 1987
Category : Commodity control
ISBN :

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After briefly reviewing the problems caused by commodity price instability, the authors develop a mathematical model for commodity markets. The implications of this model for intervention and the welfare effects are then considered. A fully developed model of the world copper market is usedto investigate alternative buffer stock intervention rules in order to assess the scope and limitations of such stabilization strategies.

Author : S. Ghosh
Publisher : Oxford University Press, USA
Page : 464 pages
File Size : 16,4 MB
Release : 1987
Category : Business & Economics
ISBN :

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After briefly reviewing the problems caused by commodity price instability, the authors develop a mathematical model for commodity markets. The implications of this model for intervention and the welfare effects are then considered. A fully developed model of the world copper market is usedto investigate alternative buffer stock intervention rules in order to assess the scope and limitations of such stabilization strategies.

Author : Robert B. Campbell
Publisher :
Page : 52 pages
File Size : 37,55 MB
Release : 1985
Category : Commodity exchanges
ISBN :

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This paper analyzes the effects of three alternative rules on the long-run distributions of both the spot and futures prices ina single commodity market, in which the key behavioral relationships are derived from the optimizing behavior of producers and speculators.The rules considered include: (i) leaning against the wind in the spot market; (ii) utility maximizing speculative behavior by the stabilization authority in the futures market; (iii) leaning against the wind in the futures market. Since the underlying model is sufficiently complex to preclude analytical solutions, the analysis makes extensive use of simulation methods. As a general proposition we find that intervention in the futures market is not as effective in stabilizing either the spot price of the futures price as is intervention in the spot market. Indeed, Rule (iii), while stabilizing the futures price may actually destabilize the spot price. Furthermore, the analogous type of rule undertaken in the spot market will always stabilize the futures price to a greater degree than it does the spot price. The welfare implications of these rules are also discussed. Our analysis shows how these can generate rather different distributions of welfare gains, including the overall benefits

Author : Abby Kim
Publisher :
Page : 68 pages
File Size : 43,89 MB
Release : 2016
Category :
ISBN :

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This paper examines how speculative futures trading affects commodity markets in terms of price impacts, volatility, and market quality. Contrary to the popular belief that speculators are responsible for the recent commodity price fluctuation, my analysis finds no evidence that speculators destabilize the spot market. Instead, speculators contribute to lower volatility and enhanced market quality. More importantly, the empirical results provide strong evidence that speculators either have no effect or dampen prices during periods of large price movement. My findings suggest speculators have had a significant, and in fact positive, influence on the commodity market during the recent "financialization" period, implying that restricting speculative trading in the futures market is not an efficient way to stabilize the commodity market.