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1 – 10 of 468Christina Kleinau and Nick Lin-Hi
This paper aims to conceptually analyse the role of speculation in society to determine whether agricultural commodity index funds, a new form of speculation, contribute to…
Abstract
Purpose
This paper aims to conceptually analyse the role of speculation in society to determine whether agricultural commodity index funds, a new form of speculation, contribute to sustainable development.
Design/methodology/approach
The theoretical arguments justifying the value of the market economic system for generating sustainable development and the positive contribution speculators make too in this context are elaborated. It is then considered whether the arguments justifying traditional speculation hold for agricultural commodity index funds.
Findings
Traditional forms of speculation contribute positively to sustainable development; primarily due to the information they uncover on demand and supply factors which affect prices. Agricultural index funds are a danger to sustainable development, as their transactions are not based on demand and supply factors but simply represent demand for the diversification effect which commodities generate when added to an investment portfolio.
Originality/value
The article offers a new approach to assessing whether agricultural index funds contribute to sustainable development. Empirical research has been conducted on whether speculation via index funds has unjustifiably affected commodity prices. However, results of these investigations have been inconclusive due to stark limitations in data availability. By approaching the issue from a conceptual point of view, the article delivers theoretically sound arguments as to why agricultural commodity index funds are likely to have an unjustifiable effect on prices and, hence, are a danger to sustainable development. This has strong implications for finance practice and regulation.
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Qianqian Mao, Yanjun Ren and Jens-Peter Loy
The purpose of this paper is to detect the existence of price bubbles and examine the possible contributing factors that associate with price bubble occurrences in China…
Abstract
Purpose
The purpose of this paper is to detect the existence of price bubbles and examine the possible contributing factors that associate with price bubble occurrences in China agricultural commodity markets.
Design/methodology/approach
Using recently developed rolling window right-side augmented Dickey–Fuller test, we first detect the dates of price bubbles in China's two important agricultural commodity markets, namely corn and soybeans. Then, we use a penalized maximum likelihood estimation of a multinomial logistic model to estimate the contributing factors of price bubbles in both markets, respectively.
Findings
Results from the bubble detection indicate that price bubbles account for 5.48% (3.91%) of the studied periods for corn (soybeans). More importantly, we find that market liquidity and speculation have opposite effects on the occurrences of bubbles in the corn and soybeans market. World stocks-to-use and exchange rates affect the occurrences of bubbles in a different way for each commodity, as well. Price bubbles are more likely associated with strong economic activity, high interest rates and low inflation levels.
Originality/value
This is the first study considering commodity-specific features into the formation of price bubbles. Through accurately identifying the bubble dates and fixing the estimation bias of rare events models, this study enables us to obtain robust results for each commodity. The results imply that China's corn and soybeans market respond differently to the speculative activity and external shocks from international markets. Therefore, future policy regulations on commodity markets should focus on more commodity-specific factors when aiming at avoiding bubble occurrences.
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J. Alexander Nuetah, Yitian Xiao and Pei Guo
The purpose of this paper is to provide readers with the main findings and conclusions of papers presented at the 2011 CAER‐IFPRI International Conference held under the theme “Is…
Abstract
Purpose
The purpose of this paper is to provide readers with the main findings and conclusions of papers presented at the 2011 CAER‐IFPRI International Conference held under the theme “Is China entering a high food price era?”
Design/methodology/approach
The authors conduct a desk review of papers presented at the conference and provide a brief summary of the analytical tools, and main findings and conclusions of each presentation.
Findings
These reviews show that, while there seems to be an increase in the prices of agricultural commodities on the Chinese market, in real terms, these rises fall far below the increases in the prices of industrial commodities. Thus, expert views remain divided on whether China is entering an era of high food price.
Originality/value
The discussions initiated by the conference theme aroused researchers' curiosities for further studies into understanding the current level of food prices in China.
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Empirical studies have documented the linkage between exchange rate movement and food prices. However, the purpose of this study is to investigate the degree and direction of…
Abstract
Purpose
Empirical studies have documented the linkage between exchange rate movement and food prices. However, the purpose of this study is to investigate the degree and direction of returns and volatility spillover transmission between exchange rate and domestic food prices in Nigeria.
Design/methodology/approach
The study uses weekly data from January 2010 to January 2019. Also, the study adopts the improved Diebold and Yilmaz (2012) approach to evaluate the return and volatility spillover between food price and naira to dollar exchange rate. The study also account for 2016 exchange rate crash in the interconnectedness between food prices and naira to dollar exchange rate.
Findings
The paper finds evidence of directional interdependence among the considered food prices and exchange rate based on the obtained spillover indexes. In addition, exchange rate returns and volatility transmission to food prices is more than it receives, particularly after the exchange rate crash.
Research limitations/implications
The high consumption of staple foods requires policies on price stabilisation such as massive investment in local production and reduction in import dependence, in order to cushion the effects of exchange rate depreciation on domestic prices of food.
Originality/value
This study is the first empirical study to investigate the interconnectedness between exchange rate and domestic food prices for a food import–dependent developing country using the Diebold and Yilmaz approach.
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Fabio Barbieri and João Fernando Rossi Mazzoni
The purpose of this paper is to discuss the pioneering work of the 19th-century French author Jean-Gustave Courcelle-Seneuil in developing a scientific perspective on management…
Abstract
Purpose
The purpose of this paper is to discuss the pioneering work of the 19th-century French author Jean-Gustave Courcelle-Seneuil in developing a scientific perspective on management, whose origin is commonly associated with the contributions of Frederick Taylor and Henri Fayol.
Design/methodology/approach
Through a historical analytical approach and doing a parallel analysis with the origins of the economic theory, fragments of two works by Jean-Gustave Courcelle-Seneuil (1813–1892) are analyzed: The Theoretical and Practical Treatise on Industrial, Commercial and Agricultural Enterprises: A Business Manual (1855) and Ergonomics, the second part of the book Theoretical and Practical Treatise on Political Economy (1858), in which the author devotes a chapter to relevant aspects of management, such as entrepreneurship, production, human resources, finance and accounting.
Findings
In addition to noting the pioneering character of these contributions, particularly the emphasis on entrepreneurship, Courcelle-Seneuil’s argument favors in the 19th century a scientific approach to management, contradicting the belief of businesspeople of the time, according to whom management was something practical, impossible to be studied analytically.
Research limitations/implications
This study indicates that looking to the past is essential to know what has already been produced in a particular field of knowledge. This return to the origins is fundamental to understanding how science evolves. Although management as a systematized field of expertise is usually dated to the beginning of the 20th century, there are reasons to expand on the influences that gave rise to this science, particularly regarding lesser-known but equally important contributions.
Originality/value
This study explores a lesser-known contribution to the origin of management theory and seeks to contribute to the study of the origin of the division of the fields of management science, its roots and its intersection with the economic science practiced in the half of the 19th century.
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Xiaoliang Liu, Guenther Filler and Martin Odening
The authors' paper aims to deal with the question whether speculative bubbles are present in agricultural commodity prices.
Abstract
Purpose
The authors' paper aims to deal with the question whether speculative bubbles are present in agricultural commodity prices.
Design/methodology/approach
The authors apply a regime switching regression model to test the hypothesis that agricultural prices contain periodically collapsing bubbles. Using daily futures prices for six agricultural commodities, the authors calculate net convenience yields from which price fundamentals are derived.
Findings
The authors discover pronounced deviations between observed prices and their fundamental values. However, they do not find evidence for the presence of periodically and partially collapsing speculative bubbles for five of six commodities. Except for soybeans, the signs and the significance of the estimated coefficients are not entirely in line with the predictions of the theoretical model.
Originality/value
The authors' study adds to the heated discussion on the impact of speculative behavior on agricultural commodity prices. So far, most contributions in the literature either use theoretical arguments for the (non‐) existence of bubbles or apply indirect tests which are plagued by low statistical reliability. In contrast, the authors apply a direct test. They find that the outcome of empirical bubble tests depends on the considered bubble type and on the testing procedure. In view of these ambiguities, definite statements on the presence of speculative bubbles as well as demands for limitations of speculative positions in commodity futures markets should be carefully reconsidered.
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Allyn Young′s lectures, as recorded by the young Nicholas Kaldor,survey the historical roots of the subject from Aristotle through to themodern neo‐classical writers. The focus…
Abstract
Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.
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Manogna RL and Aswini Kumar Mishra
The phenomenon known as financialization of commodities, arising from the speculation in commodity derivatives market, has raised serious concerns in the recent past. This has…
Abstract
Purpose
The phenomenon known as financialization of commodities, arising from the speculation in commodity derivatives market, has raised serious concerns in the recent past. This has prompted distortion in agricultural commodity prices driving them away from rational levels of supply and demand shocks. In the backdrop of financialized commodities leading to increase in price of agricultural products and their interaction with equity markets, the authors examine the investment of institutional investors in impacting the agricultural returns. The paper aims to focus on the financial mechanism that drives extreme values and the mean of agricultural returns.
Design/methodology/approach
The authors employ the Threshold AutoRegressive Quantile (TQAR) methodology to find evidence of linkages between the Indian agricultural and equity markets from January 2010 to May 2020 consistent with the rise in inflows of institutional investors in agricultural markets.
Findings
The results reveal that the investors impact the agricultural commodity markets strongly when the composite commodity index value (COMDEX) is low. Additionally, in the lower extreme quantiles (0.25) of agricultural returns, the integration between the equity index and agricultural returns is found to be highly significant compared to insignificant values in the higher quantiles (0.75 and 0.95) in both the regimes. The results suggest that low values of agricultural commodities are more closely linked to equity indices when composite commodity index value is low. This implies that, at the lower quantiles of COMDEX return (bad day), the investors move to the stock market. In that way, the commodity index returns are seen to be as a strong channel for the financialization of Indian agricultural commodities and suggesting potential involvement of investors during those regime.
Research limitations/implications
Regulators need to anticipate the price fluctuations in spot and futures markets. Investors in commodity markets need to strengthen risk awareness to carry out portfolio strategies.
Practical implications
From policy perspective, it is of pivotal importance to enhance the understanding of the financialization of agricultural products. The findings provide reference measures to stabilize the commodity markets, alleviate price distortions and carry out further evidence of price discovery and risk management in Indian commodity markets.
Originality/value
To the best of the authors’ knowledge, this study is the first to highlight the potential influence of financial markets on the financialization of agricultural commodities in an emerging economy like India.
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Marius Michels, Johannes Möllmann and Oliver Musshoff
Adoption rates of commodity futures contracts among farmers are rather low in Europe despite their political support. The purpose of this paper is to examine whether the…
Abstract
Purpose
Adoption rates of commodity futures contracts among farmers are rather low in Europe despite their political support. The purpose of this paper is to examine whether the Technology Acceptance Model (TAM) can contribute to the understanding of farmers’ intention to use commodity futures contracts. Here, the authors explicitly distinguish between usage motives for price risk reduction and speculation.
Design/methodology/approach
The study is based on an online survey with 134 German farmers using partial least squares structural equation modeling to estimate the TAM.
Findings
The intention to use commodity futures contracts is mostly driven by farmers’ motivation for speculation rather than price risk reduction. Assuming risk averse farmers, this result could explain low adoption rates. Furthermore, perceived ease of use has a positive effect on the intention to use commodity futures contracts.
Practical implications
Handling of price hedging instruments should be facilitated to increase farmers’ adoption. Effective marketing trainings, which can demonstrate the ability of commodity futures contracts to reduce price risk, could increase farmers’ motivation to use them for their risk management instead of speculation.
Originality/value
This study analyzes path relationships between constructs expected to influence the intention to use commodity futures contracts which are allowed to be estimated by the TAM in one model. Here, the authors explicitly distinguish between usage motives for price risk reduction and speculation. This is the first study applying the TAM to price risk management tools.
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Moumita Basu and Ranjanendra Narayan Nag
This is a theoretical paper in the field of structuralist macroeconomics. The paper focuses on commodity price fluctuation which has emerged as one of the major macroeconomic…
Abstract
Purpose
This is a theoretical paper in the field of structuralist macroeconomics. The paper focuses on commodity price fluctuation which has emerged as one of the major macroeconomic factors with significant bearing on the relationship between the agricultural and nonagricultural sectors.
Design/methodology/approach
The paper develops a dual economy model consisting of an agricultural sector and an industrial sector. The commodity price is subject to the fluctuations due to the fact that stock of primary goods is an asset which is sensitive to speculations. The paper considers a standard methodology of dynamic adjustment process involving change in stock of agricultural goods and price of agricultural goods under perfect foresight. The saddle path properties of the equilibrium are also examined.
Findings
The paper shows that the balanced budget fiscal expansion, capital account liberalization and the agricultural expansion lead to expansion of the industrial sector as well as level of employment. The increase in world interest rate may lead to contraction of the industrial sector and depress employment.
Originality/value
We will consider the openness of the economy in explaining how different macroeconomic policies and capital account liberalization generate multiple cross effects on the inter-connectedness between agricultural and the non-agricultural sector. The paper will discuss the issue of employment generation in conjunction with commodity price fluctuation. We depart from the literature by using Taylor rule under which interest rate is fixed by the Central Bank such that money supply becomes endogenous.
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