Causes and Implications of Shifts in Financial Participation in Commodity Markets
<section xml:id="fut21674-sec-0001"> We assess the causes and implications of the greater financial participation in commodity markets post‐2003. Focusing on crude oil, we build a calibrated macro‐finance model of oil prices and quantities that also determines consumer welfare. We show that shifts in the preferences and constraints of financial speculators cannot explain the observed movement in the futures spread and so are unlikely to expose consumer welfare to shocks, even in the presence of belief disagreements. Shifts in the supply and demand for spot oil can better explain many of the features often attributed to financialization including financial participation itself. © 2014 Wiley Periodicals, Inc. Jrl Fut Mark 34:757–787, 2014 </section>
Year of publication: |
2014
|
---|---|
Authors: | Fattouh, Bassam ; Mahadeva, Lavan |
Published in: |
Journal of Futures Markets. - John Wiley & Sons, Ltd.. - Vol. 34.2014, 8, p. 757-787
|
Publisher: |
John Wiley & Sons, Ltd. |
Saved in:
freely available
Saved in favorites
Similar items by person
-
OPEC: What Difference Has It Made?
Fattouh, Bassam, (2013)
-
The Role of Speculation in Oil Markets: What Have We Learned So Far?
Fattouh, Bassam, (2013)
-
The Role of Speculation in Oil Markets: What Have We Learned So Far?
Fattouh, Bassam, (2012)
- More ...