Abstract

http://ssrn.com/abstract=2350243
 
 

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The Financialization of Commodity Markets


Ing-Haw Cheng


Dartmouth College - Tuck School of Business

Wei Xiong


Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

October 1, 2013


Abstract:     
The large inflow of investment capital to commodity futures markets in the last decade has generated a heated debate about whether financialization distorts commodity prices. Rather than focusing on the opposing views concerning whether investment flows either did or did not cause a price bubble, we critically review academic studies through the perspective of how financial investors affect risk sharing and information discovery in commodity markets. We argue that financialization has substantially changed commodity markets through these mechanisms.

Number of Pages in PDF File: 36

Keywords: futures speculation, financialization, hedging, oil prices, risk sharing, information discovery

JEL Classification: G10, G12, G13, G14, G20, E44

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Date posted: November 6, 2013 ; Last revised: November 16, 2013

Suggested Citation

Cheng, Ing-Haw and Xiong, Wei, The Financialization of Commodity Markets (October 1, 2013). Available at SSRN: http://ssrn.com/abstract=2350243 or http://dx.doi.org/10.2139/ssrn.2350243

Contact Information

Ing-Haw Cheng (Contact Author)
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
Wei Xiong
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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