Is financial speculation with agricultural commodities harmful or helpful? A literature review of current empirical research

Matthias Georg Will, Sören Prehn, Ingo Pies and Thomas Glauben

No 2012-27, Discussion Papers from Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics

Abstract: This literature survey comprises 35 empirical studies published between 2010 and 2012 that analyze the influence of financial speculation on the markets for agricultural commodities. According to the current state of research, there is little supporting evidence that the recent increase in financial speculation has caused either a)of the price level, or (b) the price volatility in agricultural markets to rise. Rather, fundamental factors are responsible for this. Therefore, most papers are not in favor of, but against (c) erecting market barriers by regulation. Against this background, the public alarm, which claims that financial speculation has detrimental effects and should be forbidden, seems to be a false alarm. Those who are interested in fighting global hunger should take care of fundamental factors and take appropriate measures to keep supply in step with demand, which is likely to rise in the near future.

Keywords: Financial speculation; futures market; agricultural commodities; regulation; position limits; transaction tax; volatility; price level; Finanzspekulation; Terminmarkt; Agrarrohstoffe; Regulierung; Positions-Limits; Transaktionssteuer; Volatilität; Preisniveau (search for similar items in EconPapers)
JEL-codes: D84 G12 G13 G14 Q13 Q18 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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