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Hoard Behavior During Commodity Bubbles

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  • Hong, Harrison G
  • de Paula, Aureo
  • Singh, Vishal

Abstract

Hoarding by large speculators is often blamed for contributing to commodity market panics and bubbles. Using supermarket scanner data on US household purchases during the 2008 Rice Bubble, we show that hoarding is in fact more systemic, affecting even households who have no resale motive. Export bans led to a spike in prices worldwide in the first half of 2008, which spilled over into US markets. Anticipating shortages, US households with previous purchases of rice, especially those of Asian ethnicity, nearly doubled their buying around the peak of the bubble. We document transmission mechanisms through over-extrapolation from high prices and contagion, as many households bought rice for the first and last time during the bubble.

Suggested Citation

  • Hong, Harrison G & de Paula, Aureo & Singh, Vishal, 2015. "Hoard Behavior During Commodity Bubbles," CEPR Discussion Papers 10441, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10441
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    References listed on IDEAS

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    More about this item

    Keywords

    Commodity bubbles; Commodity pricing; Hoarding; Rice;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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