, consumption/savings, and portfolio selection. For a lump-sum investment payoff and an agent with a sufficiently strong … precautionary savings motive, an increase in volatility can accelerate investment, contrary to the standard real options analysis …. When the agent can trade the market portfolio to partially hedge against investment risk, the systematic volatility is …

speculators are capital constrained, and commodity producers have hedging demands for commodity futures. Increases (decreases) in … producers' hedging demand (speculators' risk-capacity) increase hedging costs via price-pressure on futures, reduce producers … associated with producer hedging demand rises when speculative activity reduces. We conclude that limits to financial arbitrage …

. Hedge fund leverage is lowest in early 2009 when the market leverage of investment banks is highest. Changes in hedge fund …

We study the implications of hedging for firm financing and investment. We do so using an extensive, hand … channels (cost of borrowing and investment restrictions) through which hedging affects corporate outcomes. The analysis we … present shows that hedging has a first-order effect on firm financing and investment, and provides new insights into how …

hedging approach can eliminate nearly 90 percent of the tracking error of more conventional inflation hedging strategies. We … also find that long-short positions in equities play a dominant role in the effective hedging of inflation risk over …

if the investment horizon is measured in centuries. Over practical investment horizons, gold is an unreliable inflation …

common practice of categorically classifying trading by hedgers as hedging while trading by speculators as speculation, as …

This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for … commodity-exporting countries. We show that the introduction of hedging instruments such as futures and options enhances …