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The purpose of thisresearch is to study the relation between wheat price shocks and speculativemovements. VAR model is developed to analyze the data. Impulse-Response functionsand Variance Decomposition method are used to analyze the size of relationshipamong the variables. Wheat prices are effected significantly by speculativemovements in the short-run. The relation loses its significance after threemonths. The effect of speculation on wheat prices can lead to negative reactionfrom the producers; that will be harmful for an economy as a whole. In order toprevent this, effective use of the government policies is needed; so that, inthe long-run, not only economic but also speculative based price structure canbe achieved. The disclosures of global wheat yield estimated by the authoritiescan be a helpful tool in order to control speculative movements and inachieving long-run market equilibrium. This study encompasses a bigger pictureand provides an opportunity to have a deeper and broader look into the dynamicsof wheat prices. Thus, it can be advantageous for traders as well as for policymakers.


Wheat, Price Shocks, VAR Model, Speculation

Cite this paper

Çinar, G. , Hushmat, A. and Uzmay, A. 2015 Does Speculation Matters for Wheat Price Shocks?. Theoretical Economics Letters, 5, 522-530. doi: 10.4236-tel.2015.54061.

Autor: Gökhan Çinar1, Adnan Hushmat2, Ayşe Uzmay3



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