Informational Frictions and Commodity Markets
This paper develops a model to analyze information aggregation in commodity markets. Through centralized trading, commodity prices aggregate dispersed information about the strength of the global economy among goods producers whose production has complementarity, and serve as price signals to guide producers' production decisions and commodity demand. Our analysis highlights important feedback effects of informational noise originating from supply shocks and futures market trading on commodity demand and spot prices, which are ignored by existing empirical studies and policy discussions.
|Date of creation:||Mar 2013|
|Date of revision:|
|Publication status:||published as MICHAEL SOCKIN & WEI XIONG, 2015. "Informational Frictions and Commodity Markets," The Journal of Finance, vol 70(5), pages 2063-2098.|
|Note:||AP IFM ME|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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