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Vayanos, D. (2004) Flight to Quality, Flight to Liquidity, and the Pricing of Risk. Working Paper, London School of Economics, London.

has been cited by the following article:

• TITLE: Fluctuations in Base Metals Prices

  AUTHORS: Nguyen Bao Anh, Aggey Semenov

  KEYWORDS: Base Metals, Price Fluctuations, Investment, Risk Aversion, Metals Industry, LME, International Exchange

  JOURNAL NAME: Theoretical Economics Letters, Vol.5 No.4, August 18, 2015

  ABSTRACT: To explain fluctuations of base metals prices we propose a model of short-run pricing based on trade in international exchanges. We introduce the critical tradeoff of choosing the share of material input from risky mining extraction versus risk-free recycling. We show that if more producers participate in the international exchange, or producers are less risk averse, the prices of base metals fluctuate more. If there are more traders, or producers are less risk averse, the prices of base metals fluctuate less. These observations may shed light on price movement during the recent financial crisis and possible future liquidity crises.