Effects of Global Liquidity on Commodity and Food Prices

Abstract

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Can urban coffee consumption help predict US inflation?

“…The first strand involves the use of commodity price aggregates, as in Stock and Watson (), but considers alternative methodologies in order to deal with issues of nonlinearities and structural breaks (see Browne & Cronin, ; Chen et al, ; Ciner, ). The second strand attempts to isolate key components of the composite commodity price index, such as the oil price, gold price or coffee price, among others, and thereafter tests the significance of the individual components in the prediction of inflation (see, e.g., Belke, Bordon, & Volz, ; Fernandez, ; Karlsson & Karlsson, ; Otero, ; Raju & Melo, ; Salisu & Isah, ; Sek, ; Van Hoang et al, ).…”

Factor pricing in commodity futures and the role of liquidity

“…Hong and Yogo (2012) Fuertes et al (2010) discover that trading volume and its percentage change fail to explain abnormal returns brought about by momentum and term structure. Recent papers including Belke et al (2012), and link global financial liquidity and financialization to commodity price movements. However, the results are mixed.…”

Impact of a Low Interest Rate Environment – Global Liquidity Spillovers and the Search-for-Yield

“…Recent research on the impacts of global monetary liquidity corroborates that low interest rates in advanced economies may well lead to spillover effects in emerging markets, leading to upward pressure on exchange rates in the latter countries, causing credit and asset bubbles over there (such as Chinese property bubble) and, until recently, inflated commodity prices (Belke, Bordon and Volz, 2013, BIS, 2012, Chapter III, and The Economist, 2012. As a result, these countries cannot pursue their domestic stabilization objectives any more.…”

“…An important drawback of too easy global monetary policy is that it also causes rises in commodity prices Volz, 2013, andBIS, 2012, Graph IV.9, left-hand panel). Although commodity price inflation took place particularly in emerging markets, it might feed into advanced economies' inflation because emerging market economies are increasingly important in global supply chains.…”