We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

The Global Economy - Essay Example

Comments (0)
The Global Economy Name: Institution: THE GLOBAL ECONOMY 1. Discuss the factors influencing the volatility of agricultural commodity prices and the mechanisms available for governments and businesses to manage these price movements. Prices of agricultural commodities, it has been argued, are volatile due to short run supply and low elasticity…
Download full paper
The Global Economy
Read TextPreview

Extract of sample
The Global Economy

Download file to see previous pages... They demonstrate average volatility shifts of many prices of agricultural commodities and finds further support in implied volatility evidence. This happens against a backdrop of shifts towards global markets and market liberalization, as well as dramatic alterations within the energy sector with regard to bio-fuel production. One factor that affects the volatility of these agricultural commodity prices is trends (Cooke & Robles, 2011: 56). Long run decreases or increases in series volatility may occur. These can be accounted for by the inclusion of time trends in variables explaining volatility. Another factor is stock levels. As stock levels of various commodities drop, there is an expectation that volatility in prices of these commodities will also increase. Low stocks will lead to dependence, on current production, to meet consumption demands in the short term also increasing. Further yield shocks could portend an increasingly dramatic effect on the commodity prices. The yields for particular crops will also drive a commodity’s price up or down. In relation to expectations, a large yield may cause prices to drop while a particularly low yield may result in an increase, in the price (FAO, 2011: p123). If the prices respond in a symmetrical manner to the yields, then no impact will be expected on the series volatility. If, however, a bigger yield impacts more on the prices, then volatilities will be positively related to yields while, conversely if lower yields have more impact on the prices than higher yields, then the volatilities will have a negative correlation to the yields. Another factor has to do with the transmission across prices. Positive transmission of price volatilities is expected across agricultural commodities. Global markets do experience international shocks that could influence the world demand for agricultural commodities with these markets also adjusting to policy movements, which may impact simultaneously on a number of commodities (FAO, 2011: p124). In addition, Volatility in a particular market may have a direct impact on another’s volatility where stocks are speculatively held. Exchange rate volatility is another factor that affects volatility of agricultural commodity prices (Hill, 2011: p33). Prices received by producers on deflation into the domestic producer currency may impact significantly on commodity prices at which the producers are prepared to sell. This is also extended to stockholders. Volatile rates of exchange significantly increase the risk inherent in returns. Therefore, it is expected that a positive volatility of exchange rate transmission could result in agricultural commodity price volatility. Oil price volatility is another factor with perhaps the biggest agricultural production shifts in the past decade, and one that is expected to continue, being the move towards the use of bio-fuels (Hill, 2012: p56). Recent empirical studies have suggested the transmission of prices between sugar prices and oil. A likely link also exists between the costs of input and that of output. Freight costs, mechanized agriculture, and fertilizer prices all depend on the price of oil, which are transmitted to agricultural commodity prices. In light of the recent unprecedented volatility of oil prices, this volatility shows a potential to spill over into agricultural commodity volatility. For example, the sudden interruption of fuel availability during the Iraq war in 2002 ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
The Global Economy
A liquidity overflow in the US banking system would decrease interest rates thereby raising the rate of capital lending in the real estate sector and augmenting revenues in the corporate division (Hudson 2010). In spite of possible inflation and devaluation of the dollar, quantitative easing could potentially revive the staggering economy of the U.S.
9 Pages(2250 words)Essay
The Global Economy
Basically, the unemployment rate is treated as the ratio of the individuals unemployed over the number of individuals classified in the labor force. It has to be noted that the students and other individuals out of the labor force are excluded from the computation.There are several constraints that affect the accurate computation of unemployment rate.
5 Pages(1250 words)Essay
Business and the global Economy
Wal-mart is an American corporation in the discount retailing industry that runs around 8,000 stores worldwide. According to the 2008 Forbes Global 500, Wal-Mart is the world's largest public corporation by revenue.(2009) Wal-Mart usually grabs a spot in the Top 10 annual list of the world's largest companies by revenue, market value, rank etc.
2 Pages(500 words)Essay
Managing in the global economy
Many times such investments may turn out to be a big loss to the company. The main reason for this is the assumption that one approach works everywhere fails to consider differences that exist
3 Pages(750 words)Essay
as expanded significantly since World War II for a number of reasons, including lower transportation and information costs, higher per capita income, and changes in government policies” (Krol, 2008, P.3), the significance of such a policy has been enhanced manifold. It may be
10 Pages(2500 words)Essay
Issues in the Global Economy
Globalisation in the market has led the countries to trade among others and has removed a lot of restrictions on business across the borders. Correspondingly, countries have started to think globally where they are bound to be affected by the state of other nations’ economy.
9 Pages(2250 words)Essay
Poverty in the Global economy
Democracy implies that every citizen has a right to equality. Income inequality creates hatred, political volatility, and erosion of the authenticity of democratic organizations. It leads to political divisions. This makes it tough for
1 Pages(250 words)Essay
Global economy
The page does not cover the concept of the ‘race to the bottom’ exhaustively, making this entry incomplete. First, the article does not fully explain how the race to the bottom is connected to issues such as the environment, labor standards, trade and regulation among
1 Pages(250 words)Assignment
Global Economy
It has a tendency to boost resource utilisation with all the economies focusing on the production of goods for which their human and natural resources are best suited for. It results in a decrease of costs, national development,
12 Pages(3000 words)Essay
The fall has especially affected the oil producing nations which had to face a decline in the global oil production. The developments in the global markets have led to a rise in anticipated supply of the oil prices and a fall in
8 Pages(2000 words)Essay
Let us find you another Essay on topic The Global Economy for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us