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01 Jun 2011

Commodity Price Formation in Boom-and-Bust Cycles

Diego Valiante

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The sharp and widespread increase in most commodity prices has alarmed the world and raised questions around the sustainability of our economies. As shown in this ECMI Commentary, the reasons for this dramatic rise are multiple, and engaging in a witch-hunt benefits neither the market as a whole nor our economies. Solutions need to be more differentiated and oriented towards two factors: preventing price manipulation (through controls on net positions and on anti-competitive market structures) and fostering sustainability.

Diego Valiante is a Research Fellow at ECMI and CEPS.