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Optimal Commodity Price Stabilization over the Business Cycle

Author

Listed:
  • Rodrigo Suescún

Abstract

This paper develops a model to study the design, characterization and dynamic implications of stabilization policies in a dynamic general equilibrium model of the business cycle for an economy tainted by the Dutch disease. The model incorporates a stabilization scheme for the producer price of an export crop in a three-sector RBC model. Stabilization funds have been very popular instruments in developing countries to deal with export price instability. This paper shows that such schemes cannot improve the functioning of the economy, notwithstanding the assumed suboptimality of private outcomes and the possibility of having welfare enhancing policies.

Suggested Citation

  • Rodrigo Suescún, 2000. "Optimal Commodity Price Stabilization over the Business Cycle," Borradores de Economia 3301, Banco de la Republica.
    • Handle: RePEc:col:000094:003301
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    File URL: http://www.banrep.gov.co/docum/ftp/borra154.pdf
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    Cited by:

    1. Miguel Urrutia & Carlos Esteban Posada & Adriana Pontón & Oscar Martínez, 2000. "Comercio Exterior y Actividad Económica de Colombia en el Siglo XX: Exportaciones Totales y Tradicionales," Borradores de Economia 163, Banco de la Republica de Colombia.

    More about this item

    Keywords

    Dynamic games;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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