Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development
Sustainable Development implies slowing the rate of utilization and eventual depletion of non-renewable resources such as oil and metals. Non-renewable resources are now commonly traded, often as derivatives, through electronic trading exchanges and studies the impact of that trading on sustainable...
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| Format: | Article |
| Language: | English |
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Elsevier
2022-01-01
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| Series: | Sustainable Technology and Entrepreneurship |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2773032822000037 |
| _version_ | 1797754782757158912 |
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| author | Yorgos D. Marinakis Reilly White |
| author_facet | Yorgos D. Marinakis Reilly White |
| author_sort | Yorgos D. Marinakis |
| collection | DOAJ |
| description | Sustainable Development implies slowing the rate of utilization and eventual depletion of non-renewable resources such as oil and metals. Non-renewable resources are now commonly traded, often as derivatives, through electronic trading exchanges and studies the impact of that trading on sustainable development are underrepresented. Commodity-currency research since 2003 to some extent has focused on the relationship between commodity prices – including non-renewable resources – and the exchange rates of the currencies of the nations that are extracting those commodities. To a lesser extent, other research on non-renewable resource development has focused on technology and innovation. Here we address one issue at the core of non-renewable sustainable development: the question of commodity-currency linkages and spillovers and their effects on price stability. Our research tool is an economic interpretation of the Lotka-Volterra equations. Using Lotka-Volterra parameters from the fit to actual CAD XCT data, we find that carrying out the currency-commodity dynamics over several centuries demonstrates the possibility for cyclical unsustainable hyperinflation. Devaluing or inflating the currencies or commodities is not a solution to hyperinflation. The solution to hyperinflation is to increase β (the effect of the commodity on the currency) and/or δ (the price decrease rate of the commodity when the currency is absent) and/or decrease γ (the inflation rate of the commodity in the presence of the currency). |
| first_indexed | 2024-03-12T17:38:26Z |
| format | Article |
| id | doaj.art-1d0fb84ef6e84d60a260e56be3b0229d |
| institution | Directory Open Access Journal |
| issn | 2773-0328 |
| language | English |
| last_indexed | 2024-03-12T17:38:26Z |
| publishDate | 2022-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Sustainable Technology and Entrepreneurship |
| spelling | doaj.art-1d0fb84ef6e84d60a260e56be3b0229d2023-08-04T05:51:20ZengElsevierSustainable Technology and Entrepreneurship2773-03282022-01-0111100003Hyperinflation potential in commodity-currency trading systems: Implications for sustainable developmentYorgos D. Marinakis0Reilly White1Corresponding author.; Anderson School of Management, University of New Mexico, Albuquerque, New Mexico 87131, United StatesAnderson School of Management, University of New Mexico, Albuquerque, New Mexico 87131, United StatesSustainable Development implies slowing the rate of utilization and eventual depletion of non-renewable resources such as oil and metals. Non-renewable resources are now commonly traded, often as derivatives, through electronic trading exchanges and studies the impact of that trading on sustainable development are underrepresented. Commodity-currency research since 2003 to some extent has focused on the relationship between commodity prices – including non-renewable resources – and the exchange rates of the currencies of the nations that are extracting those commodities. To a lesser extent, other research on non-renewable resource development has focused on technology and innovation. Here we address one issue at the core of non-renewable sustainable development: the question of commodity-currency linkages and spillovers and their effects on price stability. Our research tool is an economic interpretation of the Lotka-Volterra equations. Using Lotka-Volterra parameters from the fit to actual CAD XCT data, we find that carrying out the currency-commodity dynamics over several centuries demonstrates the possibility for cyclical unsustainable hyperinflation. Devaluing or inflating the currencies or commodities is not a solution to hyperinflation. The solution to hyperinflation is to increase β (the effect of the commodity on the currency) and/or δ (the price decrease rate of the commodity when the currency is absent) and/or decrease γ (the inflation rate of the commodity in the presence of the currency).http://www.sciencedirect.com/science/article/pii/S2773032822000037Commodity currenciesHyperinflationLotka-VolterraNon-renewable resourcesSustainable development |
| spellingShingle | Yorgos D. Marinakis Reilly White Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development Sustainable Technology and Entrepreneurship Commodity currencies Hyperinflation Lotka-Volterra Non-renewable resources Sustainable development |
| title | Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development |
| title_full | Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development |
| title_fullStr | Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development |
| title_full_unstemmed | Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development |
| title_short | Hyperinflation potential in commodity-currency trading systems: Implications for sustainable development |
| title_sort | hyperinflation potential in commodity currency trading systems implications for sustainable development |
| topic | Commodity currencies Hyperinflation Lotka-Volterra Non-renewable resources Sustainable development |
| url | http://www.sciencedirect.com/science/article/pii/S2773032822000037 |
| work_keys_str_mv | AT yorgosdmarinakis hyperinflationpotentialincommoditycurrencytradingsystemsimplicationsforsustainabledevelopment AT reillywhite hyperinflationpotentialincommoditycurrencytradingsystemsimplicationsforsustainabledevelopment |