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Aspects Of Hedging Theory

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  • Goss, Barry A.

Abstract

In this paper, interpretative comments are offered on some established aspects of the economics of futures trading, including the nature of the equilibrium condition in the case of an inverse carrying charge, some inferences about traders' market positions made from estimates of returns, and the implications of the normal backwardation hypothesis in cases where hedgers are net long. The paper also includes a survey of the recent literature on the forward pricing function of futures markets, with a discussion of, inter alia, the methods used to investigate the hypothesis that futures prices are anticipations of delivery date spot prices, and the possible reasons why some markets perform this function better than others.

Suggested Citation

  • Goss, Barry A., 1980. "Aspects Of Hedging Theory," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(3), pages 1-14, December.
    • Handle: RePEc:ags:ajaeau:22916
    DOI: 10.22004/ag.econ.22916
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    References listed on IDEAS

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    1. Leland L. Johnson, 1960. "The Theory of Hedging and Speculation in Commodity Futures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 27(3), pages 139-151.
    2. Rockwell, Charles S., 1967. "Normal Backwardation, Forecasting, and the Return to Commodity Futures Traders," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 7(Supplemen), pages 1-24.
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    6. Giles, D E A & Goss, B A, 1980. "The Predictive Quality of Futures Prices, with an Application to the Sydney Wool Futures Market," Australian Economic Papers, Wiley Blackwell, vol. 19(35), pages 291-300, December.
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    8. Rutledge, David J.S., 1972. "Hedgers' Demand for Futures Contracts: A Theoretical Framework with Applications to the United States Soybean Complex," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 11(3), pages 1-20.
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    Cited by:

    1. Fisher, Brian S., 1985. "Frontiers in Agricultural Policy Research," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 53(02), pages 1-11, August.

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