Commodities fluctuations, cross border flows and financial innovation: A stock‐flow analysis

Abstract

At the beginning of the 2000s, Latin America countries experienced rising commodities prices and, in turn, foreign investors shifted part of their portfolio composition toward the region. Unlike past episodes, more integrated financial markets allowed international players to invest in a wider range of financial instruments, usually related to composite commodity indexes. We investigate the macroeconomic implications of such innovative practices, focusing in particular on currency swings, by adopting a stock‐flow consistent (SFC) framework. The element of novelty of our contribution consists in depicting a financial sector, which issues Commodity‐Linked Notes (CLNs) to be sold to households in the developed country.

Analysis of the Relationship Between Cross Capital Flows and Stock Exchange Index with Machine Learning

“…The finding that less profitable firms may benefit more from debt capital inflows contributes to discussions on credit misallocation and capital distribution efficiency, particularly in fixed exchange rate regimes. Nalin & Yajima, (2021) delved into the impact of commodity price movements on Latin American financial dynamics. Their application of a stock-flow consistent model to study the repercussions of Commodity-Linked Notes offers an advanced understanding of how commodity fluctuations can translate into macroeconomic shifts, especially regarding currency valuations and financial innovation.…”

Application of Price Competition Model Based on Computational Neural Network in Risk Prediction of Transnational Investment

“…Related scholars have analyzed the problem of online direct sales in dual-channel supply chains under random demand and the pricing of traditional retail channels where retailers are responsible [ 13 ]. Related scholars have studied the impact of production decisions and optimal pricing in dual-channel supply chains under normal circumstances and when demand changes in emergencies [ 14 ]. The researchers analyzed how to adjust the sales price of electronic channels in the supply chain to affect the demand of the whole supply chain so as to achieve the coordination of supply and demand in the whole supply chain [ 15 ].…”

“…Related scholars have analyzed the problem of online direct sales in dual-channel supply chains under random demand and the pricing of traditional retail channels where retailers are responsible [13]. Related scholars have studied the impact of production decisions and optimal pricing in dual-channel supply chains under normal circumstances and when demand changes in emergencies [14].…”

A prototype regional stock‐flow consistent model

“…Several works have dealt with models where a country relies upon a foreign currency—usually the US dollar—to assess how imbalances generate movements in exchange rates, interest rates, and financial flows, and how monetary and fiscal policy may be constrained by dollarization (Bortz, 2014; Izurieta, 2003; Missaglia, 2021; Nalin & Yajima, 2021).…”