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Explaining the role of commodity traders: A theoretical approach

Author

Listed:
  • Raphael Chiappini

    (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - UB - Université de Bordeaux)

  • Yves Jegourel

    (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - UB - Université de Bordeaux)

Abstract

Empirical models of international commodity trade ows tend to show that exchange rate volatility has either no or negative impact on export volumes. This analysis has a number of limitations. In particular, it underestimates the role of physical traders and, consequently, the importance of future markets. In this context, this article aims to provide the theoretical underpinnings to demonstrate that these traders play a very particular role and that they have an influence on the reality of export flows due to their use of future contracts. Using a very simple cobweb model, we demonstrate that exchange rate uncertainty fuel commodities' exports while futures market volatility could have a positive impact on the level of exports.

Suggested Citation

  • Raphael Chiappini & Yves Jegourel, 2019. "Explaining the role of commodity traders: A theoretical approach," Post-Print hal-03896981, HAL.
    • Handle: RePEc:hal:journl:hal-03896981
    as

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    References listed on IDEAS

    as
    1. Sophie Mitra & Jean‐Marc Boussard, 2012. "A simple model of endogenous agricultural commodity price fluctuations with storage," Agricultural Economics, International Association of Agricultural Economists, vol. 43(1), pages 1-15, January.
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    More about this item

    Keywords

    Economy; Trade; Commodities & Energy; Natural Resources;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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