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Coffee Commodity Chain

Author

Listed:
  • Tine Olsen
  • Brett Inder

Abstract

To explain the value added along the coffee commodity chain we propose and estimate a theoretical model of the coffee commodity chain. The theoretical model consists of four markets and five agents in the coffee commodity chain and predicts that prices in the coffee commodity chain move together but are also influenced by income, technology and production. A vector error correction model is used to test the theoretical predictions. In addition to the theoretical conclusions the empirical model confirms the beneficial role of the International Coffee Agreement and the importance of the level of production in determining coffee prices.

Suggested Citation

  • Tine Olsen & Brett Inder, 2008. "Coffee Commodity Chain," Monash Economics Working Papers 06/08, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2008-06
    as

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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2008/0608coffeeolseninder.pdf
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    References listed on IDEAS

    as
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    6. Harry Bloch & A. Michael Dockery & David Sapsford, 2004. "Commodity prices, wages, and U.S. inflation in the twentieth century," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(3), pages 523-545.
    7. Helmut Lütkepohl, 2005. "Vector Error Correction Models," Springer Books, in: New Introduction to Multiple Time Series Analysis, chapter 6, pages 237-267, Springer.
    8. John Baffes & Bruce Gardner, 2003. "The transmission of world commodity prices to domestic markets under policy reforms in developing countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(3), pages 159-180.
    9. Bruggemann, Ralf & Lutkepohl, Helmut & Saikkonen, Pentti, 2006. "Residual autocorrelation testing for vector error correction models," Journal of Econometrics, Elsevier, vol. 134(2), pages 579-604, October.
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    More about this item

    Keywords

    global commodity chain; vector error correction model; coffee; value added.;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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