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Optimal Price Stabilization Policies for Staple Grains: The Case of Maize in Eastern and Sothern Africa

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  • Gerrard, Christopher D.
  • Spriggs, John

Abstract

In the context of (a) stability in domestic maize production, (b) a significant divergence between import and export parity prices for maize, and (c) random variability in world maize prices, Eastern and Southern African governments have for many years attempted to reduce the instability in domestic maize prices. However, governments face a trade-off between the fiscal costs of price stabilization and the degree of price variability allowed. This paper presents a dynamic stochastic simulation model that not only explores the nature of this trade-off, but also determines optimal government policies for domestic target prices and domestic target levels of stock in order to minimize the expected fiscal costs of maintaining given degrees of price stability.

Suggested Citation

  • Gerrard, Christopher D. & Spriggs, John, 1997. "Optimal Price Stabilization Policies for Staple Grains: The Case of Maize in Eastern and Sothern Africa," 1997 Occasional Paper Series No. 7 198053, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaaeo7:198053
    DOI: 10.22004/ag.econ.198053
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    References listed on IDEAS

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    1. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
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