01803cas a2200253 a 4500 AALejournalIMF006757 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455208876 1018-5941 BD-DhAAL BD-DhAAL Erbil, Nese. How Commodity Price Curves and Inventories React to a Short-Run Scarcity Shock / Nese Erbil, Shaun Roache. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students How does a commodity market adjust to a temporary scarcity shock which causes a shift in the slope of the futures price curve? We find long-run relationships between spot and futures prices, inventories and interest rates, which means that such shocks lead to an adjustment back towards a stable equilibrium. We find evidence that the adjustment is somewhat consistent with well-known theoretical models, such as Pindyck (2001); in other words, spot prices rise and then fall, while inventories are used to absorb the shock. Importantly, the pace and nature of the adjustment depends upon whether inventories were initially high or low, which introduces significant nonlinearities into the adjustment process. Mode of access: Internet Roache, Shaun. IMF Working Papers; Working Paper ; No. 2010/222 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/222/001.2010.issue-222-en.xml IMF e-Library