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Keynes's activity on the cotton market and the theory of the 'normal backwardation': 1921-1929

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  • Carlo Cristiano
  • Nerio Naldi

Abstract

The aim of this paper is to assess to what extent Keynes, or any other speculator, could ever have used the theory of futures contracts he formulated in the 1920s as the guiding principle for their investment strategy and what light the theory can shed on speculative behaviour. To this end, we focus our attention on Keynes' speculations on the cotton market. Our main conclusion is that Keynes did not base his speculation in cotton exclusively on the assumption that futures prices were downward biased in comparison with spot prices, as his theory would predict.

Suggested Citation

  • Carlo Cristiano & Nerio Naldi, 2014. "Keynes's activity on the cotton market and the theory of the 'normal backwardation': 1921-1929," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 21(6), pages 1039-1059, December.
    • Handle: RePEc:taf:eujhet:v:21:y:2014:i:6:p:1039-1059
    DOI: 10.1080/09672567.2014.966127
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    Cited by:

    1. Carlo Cristiano & Maria Cristina Marcuzzo & Eleonora Sanfilippo, 2018. "Taming the great depression: Keynes’s personal investments in the US stock market, 1931–1939," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(1), pages 13-40, April.
    2. Marcuzzo, Maria Cristina & Sanfilippo, Eleonora, 2022. "Keynes's personal investments in the London Stock Exchange and his views on the transformation of the British economy," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 512-526.
    3. Carter, Colin A. & Revoredo-Giha, Cesar, 2023. "Financialization and speculators risk premia in commodity futures markets," International Review of Financial Analysis, Elsevier, vol. 88(C).

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