Is Financial Speculation with Agricultural Commodities Harmful or Helpful? A Literature Review of Current Empirical Research

There is an unresolved debate about the potential effects of financial speculation on food prices and price volatility. Germany’s largest financial institution and leading global investment bank recently decided to continue investing in agricultural commodities, stating that there is little empirical evidence to support the notion that the growth of agricultural-based financial products has caused price increases or volatility. The statement is supported by a recently published literature review, which concludes that financial speculation does not have an adverse effect on the functioning of the agricultural commodities market. As public health professionals concerned with global food insecurity, we have appraised the methodological quality of the review using a validated and reliable appraisal tool. The appraisal revealed major shortcomings in the methodological quality of the review. These were particularly related to intransparencies in the search strategy and in the selection/presentation of studies and findings; the neglect of the possibility of publication bias; a lack of objective or rigorous criteria for assessing the scientific quality of included studies and for the formulation of conclusions. Based on the results of our appraisal, we conclude that it is not justified to reject the hypothesis that financial speculation might have adverse effects on food prices/price volatility. We hope to initiate reflections about scientific standards beyond the boundaries of disciplines and call for high quality, rigorous systematic reviews on the effects of financial speculation on food prices or price volatility.

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“…*Percentages refer to ratings of 7 raters who independently appraised Will et al [3] using the AMSTAR appraisal tool.…”

Section: Discussionmentioning

confidence: 99%

Relationship between financial speculation and food prices or price volatility: applying the principles of evidence-based medicine to current debates in Germany

et al. 2013

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“…-This paper sketches insights developed by Pies (2012), Will et al (2012), Prehn et al (2013) and Pies (2013). For an early German version cf.…”

Section: Real Economy Triggers For Recent Agricultural Crisesmentioning

confidence: 92%

“…In particular, we have to be alert to a growing demand for agricultural commodities. In 2050, world population is projected to be about 9.3 billion with a significantly 8 The literature review by Will et al (2012), which was inspired by the earlier study of Shutes et al (2012), summarizes 35 econometric studies. For a very short overview of the results cf.…”

Section: Policy Recommendationsmentioning

confidence: 99%

Speculation on Agricultural Commodities: A Brief Overview

et al. 2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in III AbstractThis short essay on financial speculation with agricultural commodities offers (1) a survey of the real economy factors that caused recent hunger crises, (2) an overview of academic research on the impact of index-based financial speculation on agricultural futures markets, and (3) a discussion of political measures that are appropriate for improving global food security. The arguments are supported by numerous graphs.Key Words: speculation, futures market, hunger, food security, index funds In the following brief overview, we (1) discuss the reasons within the real economy for the recent crises in the agricultural markets, (2) describe the econometric evidence for the claim that index-based futures market speculations may have contributed to these crises, and (3) we highlight several policy options that may support sustainable global food security. We illustrate our arguments with the help of numerous graphs in the appendix.

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“…Sanders and Irwin (2011) Bohl et al, 2013, p. 15). A more detailed literature survey of how financial speculation influences agricultural commodity prices can be found in Will et al (2012). They conclude that 370 there is little empirical evidence for the point of view that futures trading was the driving force behind the price spike in 2008, or that futures trading has caused increased commodity market volatility.…”

Section: The Role Of Speculationmentioning

confidence: 99%