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Abstract

An evaluation of 35 research papers into the impact of financial speculation on agricultural commodities markets has revealed: The vast majority of studies did not confirm the concerns that prevail in public discourse. The current state of knowledge indicates only a few, and weak, findings that verify the assumption that the rise in financial speculation in recent years has increased (1) the level or (2) the volatility of agricultural commodity prices. Instead, those developments have rather been caused by fundamental factors in the real economy. This is why the majority of academic studies are not in favor but against (3) enacting regulatory barriers to market entry. Transaction taxes or position limits are described as involving high risks. Various studies explicitly warn against overregulation, which would impair rather than improve the functionality of agricultural markets. Seen in this light, the alarmism about financial speculation should be classified as a false alarm: Those who desire to effectively combat hunger in the world have to take real-economy precautions to ensure that food supplies will match the envisaged increasing demands.

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