commodity-exporting countries. We show that the introduction of hedging instruments such as futures and options enhances …This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for …

futures contracts. Their hedging demand is met by financial intermediaries who act as speculators, but are constrained in risk … 1980-2006, we show that producers’ hedging demand - proxied by their default risk - forecasts spot prices, futures prices …-taking. Increases (decreases) in producers’ hedging demand (the risk-bearing capacity of speculators) increase the costs of hedging …

will allocate cash flows into cash holdings if their hedging needs are high (i.e., if the correlation between operating … if their hedging needs are low. The empirical examination of debt and cash policies of a large sample of firms reveals … hedging needs have a strong propensity to save cash out of cash flows while leaving their debt positions unchanged. In …

Despite much work on hedging in incomplete markets, the literature still lacks tractable dynamic hedges in plausible … hedger, guided by the traditional minimum-variance criterion, aims at reducing the risk of a non-tradable asset or a … generalized "Greeks," familiar in risk management applications, as well as retaining the intuitive features of their static …

We model the demand-pressure effect on prices when options cannot be perfectly hedged. The model shows that demand … demand helps explain the overall expensiveness and skew patterns of both index options and single-stock options. …

While most empirical analysis of prediction markets treats prices of binary options as predictions of the probability … are the degree of risk aversion and the distribution on beliefs, and we provide some novel data on the distribution of …

in a standard framework in which uninformed traders with hedging needs interact with risk-averse informed traders in … hedging and speculative demands: risk-averse arbitrageurs can hedge in the new market to lower the risk of speculative … risk of speculating on his belief by hedging with other assets. The availability of such hedging instruments will in turn …

a fund’s portfolio through additional leverage and hedging. First-best spending should be a share of total wealth, and … faster than the Hotelling rule to generate a risk premium on oil wealth. We then discuss how the management of Norway’s fund …

We study risk taking on behalf of others in an experiment on a large random sample. The decision makers in our … experiment are facing high-powered incentives to increase the risk on behalf of others through hedged compensation contracts or … respond strongly to these incentives that result in an increased risk exposure of others. However, we find that the increase …