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A Theoretical Discussion Of The Economic Effects Of Buffer Stocks And Buffer Funds


  • Simmons, Phil


It has been established that the absence of risk markets justifies market intervention in principle. The form of intervention that has been discussed most widely in the literature is the buffer stock. This paper points out that other forms of intervention, specifically buffer funds, are likely to perform better. The analysis shows that buffer funds are likely to outperform buffer stocks because they address market failure more directly. A sub-theme developed in this paper is that since buffer funds are enforced saving, it follows that policies that address capital market failure are likely to dominate buffer funds and buffer stocks in welfare terms.

Suggested Citation

  • Simmons, Phil, 1988. "A Theoretical Discussion Of The Economic Effects Of Buffer Stocks And Buffer Funds," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 32(02-03).
  • Handle: RePEc:ags:ajaeau:22963

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    References listed on IDEAS

    1. Salant, Stephen W, 1983. "The Vulnerability of Price Stabilization Schemes to Speculative Attack," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 1-38, February.
    2. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-334, June.
    3. Kawai, Masahiro, 1983. "Price Volatility of Storable Commodities under Rational Expectations in Spot and Futures Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(2), pages 435-459, June.
    4. Mike Hinchy & Phil Simmons, 1983. "An Optimalā€Control Approach To Stabilising Australian Wool Prices," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 27(1), pages 44-72, April.
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    Cited by:

    1. Moir, Brian & Piggott, Roley R., 1991. "Combinations Of Buffer-Stocks And Buffer-Funds For Wool Price Stabilisation In Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(01), April.

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