Many developing economies are heavily exposed to commodity markets, leaving them vulnerable to the vagaries of international commodity prices. This paper examines the use of commodity options-including plain vanilla, risk reversal, and barrier options-to hedge such risk. It then proposes the use...

Commodity Modeling and Pricing provides extensions and applications of state-of-the-art methods for analyzing resource commodity behavior. Drawing from the seminal work of Professor Walter Labys on the development of econometric methods for forecasting commodity prices, this collection of essays...

Contents; Foreword; Acknowledgments; Abbreviations; Overview; Figure O.1 The recent commodity boom was the largest and longest of any boom since 1900; Figure O.2 Real commodity prices in local currency units increased by between 75 and 150 percent but have fallen since; Figure O.3 Slower growth should...

A welfare analysis of unemployment insurance (UI) is performed in a general equilibrium job search model. Finitely lived, risk-averse workers smooth consumption over time by accumulating assets, choose search effort when unemployed, and suffer disutility from work. Firms hire workers, purchase...

There is evidence that specialization in primary product exports reduces growth. Possible explanations include a trend deterioration in the terms of trade associated with falls in the relative price of primary products, and the adverse impact of excessive export price volatility on investment...

This paper investigates the relationship between the nominal exchange rate regime and the volatility of relative commodity prices. The analysis shows that the relationship depends upon both the market structure and the economic agent’s perception about future exchange rate movements. When the...