Speculation and regulation in commodity markets: The Keynesian approach in theory and practice

The eleven papers collected in this volume present the results of the research activity undertaken by the participants in the project -The return to Keynes. Speculation and stabilization policies: money and commodities- financed by the Italian Ministry of Education (PRIN 2008). They focus on four main areas of investigation: Keynes’s ideas on speculation, case studies of Keynes speculative activity in selected commodity markets, measures of commodity price volatility and proposals for stabilizing commodity prices in the context of a wider macroeconomic framework. The main conclusions are that: i) there are strong links between fluctuations in prices of primary commodities and agricultural products on the one hand, and financial crisis and structural trade imbalances on the other; ii) in the absence of buffer stocks for commodities and with insurance against price volatility based only on market mechanisms the system is doomed to instability; iii) any policies aiming at stabilizing commodity prices and currencies must go hand in hand with reform of the international monetary system. These conclusions support the view that the original proposals put forward by Keynes are still a valid basis for reforms to cope with the current crisis.