Commodities, financialization, and heterogeneous agents

The term 'financialization' describes the phenomenon that commodity contracts are traded for purely financial reasons and not for motives rooted in the real economy. Recently, financialization has been made responsible f
The term 'financialization' describes the phenomenon that commodity contracts are traded for purely financial reasons and not for motives rooted in the real economy. Recently, financialization has been made responsible for causing adverse welfare effects especially for low-income and low-wealth agents, who have to spend a large share of their income for commodity consumption and cannot participate in financial markets. In this paper we study the effect of financial speculation on commodity prices in a heterogeneous agent production economy with an agricultural and an industrial producer, a financial speculator, and a commodity consumer. While access to financial markets is always beneficial for the participating agents, since it allows them to reduce their consumption volatility, it has a decisive effect with respect to overall welfare effects who can trade with whom (but not so much what types of instruments can be traded).
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Metadaten
Author:Nicole Branger, Patrick Grüning, Christian Schlag
URN:urn:nbn:de:hebis:30:3-400631
URL:http://ssrn.com/abstract=2759314
DOI:http://dx.doi.org/10.2139/ssrn.2759314
Parent Title (English):SAFE working paper series ; No. 131
Series (Serial Number):SAFE working paper series (131)
Publisher:SAFE
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Date of Publication (online):2016/04/29
Year of first Publication:2016
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2016/05/10
Tag:Commodities; Financial Markets; General Equilibrium; Heterogeneous Preferences
Edition:This version: April 28, 2016
Pagenumber:70
HeBIS PPN:381274624
Institutes:Wirtschaftswissenschaften
House of Finance (HoF)
Center for Financial Studies (CFS)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:E23 Production
G12 Asset Pricing; Trading volume; Bond Interest Rates
G13 Contingent Pricing; Futures Pricing
I30 General
Q11 Aggregate Supply and Demand Analysis; Prices
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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