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The Financialization of Commodity Markets

  • Ing-Haw Cheng
  • Wei Xiong

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19642.

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Date of creation: Nov 2013
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Publication status: published as Financialization of Commodity Markets Annual Review of Financial Economics Vol. 6: 419-441 (Volume publication date December 2014) First published online as a Review in Advance on October 09, 2014 DOI: 10.1146/annurev-financial-110613-034432 Ing-Haw Cheng and Wei Xiong
Handle: RePEc:nbr:nberwo:19642
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