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Roles of commodity futures derivatives and financial crises in global food security

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  • Victor Edem Sosoo
  • David Iheke Okorie
  • Haiqiang Chen

Abstract

Commodity futures have been largely blamed for the price hikes in 2007/mid-2008 and 2010/2011 and the decreased food security around the world, especially in less developed countries. There still exist serious disagreements between most economists and policymakers as to whether this is the case. We run time-series regressions for all samples and subsamples for lower-income, middle-income, and high-income countries respectively. The empirical results show that commodity futures have a more significant negative impact on food security in low-income countries than in middle-income and high-income economies. Financial crises, however, have a significant impact on food security in all the regional divisions as a whole and are seen to exasperate the negative effect of some of the commodity futures on food security. We also find evidence that a certain degree of speculation in some commodities stabilises prices of those commodities as expected by theory. Our results have important policy implications as policymakers must control these speculations but should also be careful not to overregulate the market.

Suggested Citation

  • Victor Edem Sosoo & David Iheke Okorie & Haiqiang Chen, 2021. "Roles of commodity futures derivatives and financial crises in global food security," Economic and Political Studies, Taylor & Francis Journals, vol. 9(3), pages 336-357, July.
    • Handle: RePEc:taf:repsxx:v:9:y:2021:i:3:p:336-357
    DOI: 10.1080/20954816.2021.1872854
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    Cited by:

    1. Wen, Chufu & Zhu, Haoyang & Dai, Zhifeng, 2023. "Forecasting commodity prices returns: The role of partial least squares approach," Energy Economics, Elsevier, vol. 125(C).
    2. Yujie Chen & Jiangwei Tang, 2024. "Will the financialisation of agricultural products exacerbate food security risks? Empirical analysis from major grain-producing countries worldwide," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 70(4), pages 178-186.
    3. Hana Trollman & Sandeep Jagtap & Frank Trollman, 2023. "Crowdsourcing food security: introducing food choice derivatives for sustainability," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 15(4), pages 953-965, August.

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