. Inventory smooths consumption and helps capture interest rate volatility even when the elasticity of intertemporal substitution … is small. The model is consistent with a high equity premium, a high stock return volatility, and lead-lag relations …

empirically analyze the behaviour of commodity prices and their volatility as predicted by the theory of storage. We examine two … is associated with forward curves in backwardation (contango), as the theory of storage predicts. Second, we show that … price volatility is a decreasing function of inventory for the majority of commodities in our sample. This effect is more …