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 …

While most empirical analysis of prediction markets treats prices of binary options as predictions of the probability …

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 … traders with pure hedging motives in that market to withdraw, so reducing liquidity in the old market. The general point …

a fund’s portfolio through additional leverage and hedging. First-best spending should be a share of total wealth, and …

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. …