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The Interaction of Working and Speculative Commodity Stocks

Author

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  • Carter, C.A

    (Department of Agricultural and Resource Economics, University of California, Davis, USA)

  • Cesar L. Revoredo Giha

    (Department of Land Economy, University of Cambridge, UK)

Abstract

This paper models the interaction of working (also called pipeline) and speculative commodity stocks. We model working inventories (i.e., raw material inventories carried by processors) based on Ramey's (1989) model of inventories as factors of production, which allows us to represent storage under inter-temporal price backwardation, observed in commodity markets. We incorporate both speculative and working stocks in a simple model to analyze the interaction and to simulate the relationship between inter-temporal commodity price spreads and stocks. Our model replicates common price patters found in commodity markets.

Suggested Citation

  • Carter, C.A & Cesar L. Revoredo Giha, 2005. "The Interaction of Working and Speculative Commodity Stocks," Environmental Economy and Policy Research Working Papers 03.2005, University of Cambridge, Department of Land Economics, revised 2005.
    • Handle: RePEc:lnd:wpaper:200503
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    Cited by:

    1. is not listed on IDEAS
    2. Cesar Revoredo, 2000. "On The Solution Of The Dynamic Rational Expectations Commodity Storage Model In The Presence Of Stockholding By Speculators And Processors," Computing in Economics and Finance 2000 42, Society for Computational Economics.

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