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The role of storage in commodity markets: Indirect inference based on grain data

Christophe Gouel & Nicolas Legrand

Quantitative Economics2025https://doi.org/10.3982/qe2329article
AJG 4ABDC A*
Weight
0.41

Abstract

We develop an indirect inference approach relying on a linear supply and demand model serving as an auxiliary model to provide the first full empirical test of the rational expectations commodity storage model. We build a rich storage model that incorporates a supply response and four structural shocks and show that exploiting information on both prices and quantities is critical for relaxing previous restrictive identifying assumptions and assessing the empirical consistency of the model's features. Finally, we carry out a structural estimation on the aggregate index of the world's most important staple food products. Our estimations show that supply shocks are the main drivers of food market dynamics and that our storage model is consistent with most of the moments in the data, including the high price persistence so far the subject of a long‐standing puzzle.

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https://doi.org/https://doi.org/10.3982/qe2329

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@article{christophe2025,
  title        = {{The role of storage in commodity markets: Indirect inference based on grain data}},
  author       = {Christophe Gouel & Nicolas Legrand},
  journal      = {Quantitative Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.3982/qe2329},
}

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The role of storage in commodity markets: Indirect inference based on grain data

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Evidence weight

0.41

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.25 × 0.4 = 0.10
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.