# **Endnotes**

> **1** Numerous authors have analyzed the recent commodity boom. See, for example, Abbott, Hurt, and Tyner (2008), Timmer (2008), Gilbert (2009), Mitchell (2009), Piesse and Thirtle (2009), Sarris (2009), Trostle (2008), and Coady, Dorosh, and Minten (2009). _Agricultural Economics_ devoted an entire issue to the subject (Masters and Shiverly 2008).

> **2** See, for example, Von Braun and Torero (2009) on virtual reserves and Mendoza (2009) on rice insurance mechanisms. Today’s discussions call to mind those in earlier booms (for example, Meadows and others 1972).

> **3** Calvo (2008) and Frankel (2007) have argued that interest rates played a key role during the boom.

> **4** Although underinvestment has been cited very often as the key factor in the boom, this assess‐ ment is essentially derived ex post. Certainly, any level of past investment will be considered low at high prices and high at low prices. Yet, research reported in World Bank (2009) shows that the level of investment was “right” at the time it was made. For example, during 1980‐2007, R&D and investment expenditures by major multinational oil and gas companies track very closely output prices (as evidenced by their strong correlation with energy prices, _R_<sup>_2_</sup> = 0.95). Similarly, public R&D agricultural expenditures follow agricultural GDP.

> **5** This inverse relationship is in addition to the effect of the US$ exchange rate against currencies of commodity producing and consuming countries mentioned earlier.

> **6** Information on pension and, especially, sovereign wealth funds is not widely available. The re‐ cently published first annual report on sovereign wealth funds is an attempt to fill this gap (SWF 2009).

> **7** Yet, Verleger (2009: 2) argued that “The collapse in oil prices from July 2008 to December 31, 2008 can be tied to ... the possible liquidation of futures positions.” Which begs the question: If the liquidation of futures positions were partly responsible for the collapse in oil prices, should not the taking of such positions be responsible for the corresponding increase in oil prices?

> **8** The IOSCO (2009: 3) report’s recommendations, which were based on reviewing other studies, were: (i) understand with greater clarity the role of speculative and commercial activity in com‐ modity futures markets; (ii) gain a more comprehensive view of trading activities in, and the structure of, the underlying markets that may affect price formation on commodity futures mar‐ kets; and (iii) detect, deter, and prosecute manipulation and other trading abuses involving commodity futures, and related commodity markets.

> **9** See, for example, Büyükşahin, Haigh, and Robe (2008) and Commodity Futures Trading Com‐ mission (2008).

> **10** The models used in the studies discussed in this section are the following: FAO (2008) and OECD (2008) used AGLINK; Rosegrant (2008) used IMPACT; Banse and others (2008) used GTAP‐E; EU (2008) used ESIM‐PE; Mitchell (2009) used simple statistical analysis; and Gilbert (2009) used a CAPM‐type econometric model.

> **11** Such failed arrangements include the 1962 International Coffee Agreement (and a subsequent series of agreements) to restrict exports and boost coffee prices, the 1972 International Cocoa Agreement, and similar efforts by producers of cotton and grains; the International Tin Agree‐ ment; and the International Natural Rubber Organization. For a discussion of such agreement see Gilbert (1996) and Radetzki (2009).

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