The Financialization of Food: An Inquiry into the 2008-2011 Food Price Spikes

This dissertation investigates the question: has financial speculation contributed to global food price volatility since the mid 2000s? I problematize the mainstream academic literature on the 2008-2011 food price spikes as being dominated by neoclassical economic perspectives and offer new conceptual and empirical insights into the relationship between financial speculation and food. Presented in three journal style manuscripts, manuscript one uses circuits of capital to conceptualize the link between financial speculators in the global north and populations in the global south. Manuscript two argues that what makes commodity index speculation (aka ‘index funds’ or index swaps) novel is that it provides institutional investors with what Clapp (2014) calls “financial distance” from the biopolitical implications of food speculation. Finally, manuscript three combines Gramsci’s concepts of hegemony and ‘the intellectual’ with the concept of performativity to investigate the ideological role that public intellectuals and the rhetorical actor the market play in the proliferation and governance of commodity index speculation. The first two manuscripts take an empirically mixed method approach by combining regression analysis with discourse analysis, while the third relies on interview data and discourse analysis. The findings show that financial speculation by index swap dealers and hedge funds did indeed significantly contribute to the price volatility of food commodities between June 2006 and December 2014. The results from the interview data affirm these findings. The discourse analysis of the interview data shows that public intellectuals and rhetorical characters such as ‘the market’ play powerful roles in shaping how food speculation is promoted, regulated and normalized. The significance of the findings is three-fold. First, the empirical findings show that a link does exist between financial speculation and food price volatility. Second, the findings indicate that the post-2008 CFTC and the Dodd-Frank reforms are unlikely to reduce financial speculation or the price volatility that it causes. Third, the findings suggest that institutional investors (such as pension funds) should think critically about how they use commodity index speculation as a way of generating financial earnings.

Analysing the Contribution of Business Services to European Economic Growth. Bruges European Economic Research (BEER) Papers 9/February 2007

The sector business services contributes directly and indirectly to aggregate economic growth in Europe. The direct contribution comes from the sector’s own dynamism. Though the business-services industry appears to be characterised by strong cyclical volatility, there was also a strong structural growth. Business services actually generated more than half of total net employment growth in the European Union since the second half of the 1990s. Apart from this direct growth contribution, the sector also contributed in an indirect way to economic growth by generating knowledge and productivity spill-overs for other industries. The knowledge role of business services is reflected in its employment characteristics. The business-services industry created spill-overs in three ways: original innovations, knowledge diffusion, and the reduction of human capital indivisibilities at firm level. The share of knowledge-intensive business services in the intermediate inputs of the total economy has risen sharply in the last decade. Firm-level scale diseconomies with regard to knowledge and skill inputs are reduced by external deliveries of such inputs, thereby exploiting positive external scale economies. The process goes along with an increasingly complex social division of labour between economic sectors. The European business-services industry itself is characterised by a relatively weak productivity growth. Does this contribute to growth stagnation tendencies à la the socalled “Baumol disease”? The paper argues that there is no reason to expect this as long as the productivity and growth spill-overs from business services to other sectors are large enough. Finally, the paper concludes by suggesting several policy elements that could boost the role of business services in European economic growth. This might to achieve some of the ambitious Lisbon goals with respect to employment, productivity and innovation.

The ‘Visible Hand’ of the ECB’s Quantitative Easing. CEPS Working Document No. 407/May 2015

Quantitative easing à la ECB has produced so far an impact on long-term nominal rates through ex ante channels: signalling channels, term duration channels, and risk premia channels. The term duration channel will also lead to a lengthening of the average maturity of government debts, with possible implications for fiscal policy. The ECB’s determination to buy government bonds in a fragmented market with a low net supply may also produce an ex post impact, during the actual asset purchases, but less on nominal rates and more on financial plumbing, as recent volatility suggests. As the effects of scarce supply in collateral markets are felt, repo rates remain well below zero. Lower supply and limited re-usability of high quality collateral, capped by regulatory requirements, is a constraint on market liquidity and compresses dealers’ balance sheets. By keeping a depressed yield curve and asset prices high, QE may also accelerate the consolidation of both traditional and capital-market based (dealer) bank business models. What is less clear is how these changing business models will interact with the sharp rise of the asset management industry in the aftermath of the crisis, which raises questions about the implications for global collateral flows and deposit-like funding channels.

The isotope composition of selenium in chondrites constrains the depletion mechanism of volatile elements in solar system materials

Solar nebula processes led to a depletion of volatile elements in different chondrite groups when compared to the bulk chemical composition of the solar system deduced from the Sun's photosphere. For moderately-volatile elements, this depletion primarily correlates with the element condensation temperature and is possibly caused by incomplete condensation from a hot solar nebula, evaporative loss from the precursor dust, and/or inherited from the interstellar medium. Element concentrations and interelement ratios of volatile elements do not provide a clear picture about responsible mechanisms. Here, the abundance and stable isotope composition of the moderately- to highly-volatile element Se are investigated in carbonaceous, ordinary, and enstatite chondrites to constrain the mechanism responsible for the depletion of volatile elements in planetary bodies of the inner solar system and to define a δ(82/78)Se value for the bulk solar system. The δ(82/78)Se of the studied chondrite falls are identical within their measurement uncertainties with a mean of −0.20±0.26‰ (2 s.d., n=14n=14, relative to NIST SRM 3149) despite Se abundance depletions of up to a factor of 2.5 with respect to the CI group. The absence of resolvable Se isotope fractionation rules out a kinetic Rayleigh-type incomplete condensation of Se from the hot solar nebula or partial kinetic evaporative loss on the precursor material and/or the parent bodies. The Se depletion, if acquired during partial condensation or evaporative loss, therefore must have occurred under near equilibrium conditions to prevent measurable isotope fractionation. Alternatively, the depletion and cooling of the nebula could have occurred simultaneously due to the continuous removal of gas and fine particles by the solar wind accompanied by the quantitative condensation of elements from the pre-depleted gas. In this scenario the condensation of elements does not require equilibrium conditions to avoid isotope fractionation. The results further suggest that the processes causing the high variability of Se concentrations and depletions in ordinary and enstatite chondrites did not involve any measurable isotope fractionation. Different degrees of element depletions and isotope fractionations of the moderately-volatile elements Zn, S, and Se in ordinary and enstatite chondrites indicate that their volatility is controlled by the thermal stabilities of their host phases and not by the condensation temperature under canonical nebular conditions.

Essays on Fiscal Policy, Monetary Policy and Currency Unions: Exploring the Role of Informality and Labor Mobility

Thesis (Ph.D.)--University of Washington, 2016-06

Macroeconomic Dynamics of Market Risk Capital Requirements and Credit Supply Interdependence

Thesis (Ph.D.)--University of Washington, 2016-06

Geometry and Optimization of Relative Arbitrage

Thesis (Ph.D.)--University of Washington, 2016-06

Noise trader risk and the welfare effects of privatization

Excessive volatility of asset prices like that generated in the 'noise trader' model of De Long et al. is one factor that plausibly might contribute to an explanation of the equity premium. We extend the De Long et al. model to allow for privatization of publicly-owned assets and assess the welfare effects of such privatization in the presence of excess volatility arising from noise traders' mistaken beliefs.

Application of microencapsulated flavor to extrusion product

Flavoring is still a difficult problem in the snack food industry because of the high volatility of flavors and their instability under extrusion condition. Although postextrusion added flavor is commonly used, it suffers from numerous drawbacks. Flavor losses at the exit die because flash distillation is a critical issue and can only be minimized by controlling the pressure difference at the end of the barrel and the exit die, which, however, affects other desirable product characteristics. Residence time distribution (RTD), as an important intermediate process variable that among others controls the extent of reactions, can also be a major determinant on flavor retention during extrusion. Encapsulation of flavors is a promising alternative to enhance the retention of preextrusion added flavor during extrusion. The capsules should withstand high temperature and shear conditions in, the extruder barrel. Various encapsulation techniques and their encapsulated flavor characteristics are illustrated.

Equity market linkage and multinational trade accords: The case of NAFTA

This paper examines the impact of multinational trade accords on the degree of stock market linkage using NAFTA as a case study. Besides liberalizing trade among the U.S., Canada and Mexico, NAFTA has also sought to strengthen linkage among stock markets of these countries. If successful, this could lessen the appeal of asset diversification across the North American region and promote a higher degree of market efficiency. We assess the possible impact of NAFTA on market linkage using cross-correlations, multivariate price cointegrating systems, speed of convergence, and generalized variance decompositions of unexpected stock returns. The evidence proves robust and consistently indicates intensified equity market linkage since the NAFTA accord. The results also suggest that interdependent goods markets in the region are a primary reason behind the stronger equity market linkage observed in the post-NAFTA period. (c) 2005 Elsevier Ltd. All rights reserved.

Asset Price Instability and Policy Responses: The Legacy of Liberalization

The problem of asset price bubbles, and more generally of instability in the financial system, has been a matter of concern since the 1980s but has only recently moved to the center of the macroeconomic policy debate. The main concern with bubbles arises when they burst, imposing losses on investors holding the bubble assets and potentially on the financial institutions that have extended credit to them. Asset price volatility is an inevitable consequence of financial market liberalization and, in extreme cases, generates asset price bubbles, the bursting of which can impose substantial economic and social costs. Policy responses within the existing liberalized financial system face daunting levels of uncertainty and risk. Given the pattern of increasing asset market volatility over recent decades and the policy issues highlighted in this paper, the future looks uncertain. Another significant cycle of asset price movements, especially in one of the major economies, could see a fundamental revision of thinking about the costs and benefits of liberalized financial systems.

The oil shock of 2005

During the course of 2005, the price of crude oil reached unprecedented high levels, at least in nominal terms. Australian motorists have become used to paying more than a dollar a litre for petrol. Given the past volatility in oil prices, often described in terms of a series of oil ‘shocks’ (the large price increases in 1973, 1979 and 1999), several questions arise. First, will current high prices persist, or will prices decline substantially as occurred after previous oil shocks? Second, is the current shortage of oil a temporary phenomenon, caused by inadequate investment in oil exploration, drilling and refining capacity, or is it a signal that the supply of oil available to the world has peaked? Third, will high oil prices lead to broader economic disruption, as is commonly supposed to have happened after previous shocks? Fourth, how painful will an adjustment to lower use of oil be? Finally, how does all this relate to our efforts to deal with the problem of climate change? This article is an effort to answer some of these questions in the light of the knowledge available to us.

Incremental model transformation for the evolution of model-driven systems

Model transformations are an integral part of model-driven development. Incremental updates are a key execution scenario for transformations in model-based systems, and are especially important for the evolution of such systems. This paper presents a strategy for the incremental maintenance of declarative, rule-based transformation executions. The strategy involves recording dependencies of the transformation execution on information from source models and from the transformation definition. Changes to the source models or the transformation itself can then be directly mapped to their effects on transformation execution, allowing changes to target models to be computed efficiently. This particular approach has many benefits. It supports changes to both source models and transformation definitions, it can be applied to incomplete transformation executions, and a priori knowledge of volatility can be used to further increase the efficiency of change propagation.

Concentration of the UK stock market

During 1999 and 2000 a large number of articles appeared in the financial press which argued that the concentration of the FTSE 100 had increased. Many of these reports suggested that stock market volatility in the UK had risen, because the concentration of its stock markets had increased. This study undertakes a comprehensive measurement of stock market concentration using the FTSE 100 index. We find that during 1999, 2000 and 2001 stock market concentration was noticeably higher than at any other time since the index was introduced. When we measure the volatility of the FTSE 100 index we do not find an association between concentration and its volatility. When we examine the variances and covariance’s of the FTSE 100 constituents we find that security volatility appears to be positively related to concentration changes but concentration and the size of security covariances appear to be negatively related. We simulate the variance of four versions of the FTSE 100 index; in each version of the index the weighting structure reflects either an equally weighted index, or one with levels of low, intermediate or high concentration. We find that moving from low to high concentration has very little impact on the volatility of the index. To complete the study we estimate the minimum variance portfolio for the FTSE 100, we then compare concentration levels of this index to those formed on the basis of market weighting. We find that realised FTSE index weightings are higher than for the minimum variance index.

The microstructure of the Irish stock market

This is the first paper to examine the microstructure of the Irish Stock Market empirically and is motivated by the adoption, on June 7th of Xetra the modern pan European auction trading system. Prior to this the exchange utilized an antiquated floor based system. This change was an important event for the market as a rich literature exists to suggest that the trading system exerts a strong influence over the behavior of security returns. We apply the ICSS algorithm of Inclan and Tiao (1994) to discover whether the change to the trading system caused a shift in unconditional volatility at the time Xetra was introduced. Because the trading mechanism can influence volatility in a number of ways we also estimate the partial adjustment coefficients of the Amihud and Mendelson (1987) model prior and subsequent to the introduction of Xetra. Although we find no evidence of volatility changes associated with the introduction of Xetra we do find evidence of an increase in the speed of adjustment (JEL: G15).