A Macroeconomic Structural Model for CommoditiesPrices
Over the past two decades, commodities have become mainstream financial instruments. With a flux of wealth invested in commodities markets, commodities price levels have increased beyond expectations. Moreover, the commodities markets have become more volatile than ever. Understanding the nature of price changes and market movements is essential to project and investment valuations. In this project, we aim at developing a structural storage model for commodities prices. This model will be based on supply/demand and inventory levels of commodities. Moreover, we intend to integrate macroeconomic factors such as GDP and business cycle with our model. Equipped with enhanced tools for commodities value projections, the bank can make better investment decisions and increase economic value added of the projects.