“Boundedly rational exuberance in commodity markets” – Some comments on Bertrand Munier

Reply to Willi Semmler's and Lucas Bernard's Comments

“…Finally, Semmler and Bernard [5] deem that "Most significant is (in [4]) the departure from the Walrasian paradigm" (their conclusion, line 2). Their comments in their first paragraph lead to think that they are rejecting the Walrasian "tâtonnement" as an appropriate description of what happens in markets.…”

“…Yet, the volatility has been increasing in the last decade, and the explanation had to be also consistent with that observation (see the next discussion point on this issue and the reference to [6]). Semmler and Bernard [5] remark however that the volatility of nonagricultural raw products has been higher than the one of agricultural commodities and claim that we should not overemphasize the phenomenon with respect to the agricultural markets. My view here is slightly different.…”

“…In a very interesting development, Semmler and Bernard argue [5] that "Financialization" should not be defined in the somehow narrow way I have done in [4]. It not only consists in investing in derivatives, index options or other "paper" business based on commodities, but should also refer, they argue, to the financing of the production of these commodities on negotiation OTC markets.…”

“…I feel very thankful to Willi Semmler and Lucas Bernard [5] for their nice and insightful comments. They make several interesting points:…”