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The Impacts of Speculative Trading on Commodity Prices After the Global Financial Crisis
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 Title & Authors
The Impacts of Speculative Trading on Commodity Prices After the Global Financial Crisis
Kim, Hwa-Nyeon;
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 Abstract
This study verifies whether speculative trading in commodity markets acted as the primary cause of the increase in commodity prices after the global financial crisis using the Structural Vector Autoregressive (SVAR) model. The effects of speculative trading on commodity prices increased by a factor of 3 to 6 after the crisis compared to those before the crisis. Although the demand related variables, such as industrial production, affected commodity prices significantly before the crisis, their effects decreased after the crisis. Consequently, the rebound of commodity prices after the crisis was mainly caused by the increase in speculative money, fortified by the expansion of the global liquidity supply. The global liquidity may well increase in the future, because the U.S. Federal Reserve Board is likely to continue to increase its interest rate. This study claims that when global liquidity shrinks as a result of a change in the Fed's monetary policy stance, speculative trading will slow down, leading to a decline in commodity prices.
 Keywords
Commodity Prices;Global Financial Crisis;Liquidity;Speculative Trading;Structural VAR;
 Language
Korean
 Cited by
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