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Commodity buffer stock redux: The role of International Cocoa Organization in prices and incomes

  • Swaray, Raymond
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    This paper utilizes linear demand and supply models, with additive independent shocks, to derive producer price and income variances of a typical commodity during and after a buffer stock control. It proceeds to use the models to evaluate International Cocoa Organization's (ICCO) Buffer Stock's decision to purchase excess stock from the market a floor price and re-sell it, in periods of low supply, at the ceiling price. The results show that cocoa producer prices and incomes were more stable during periods of ICCO buffer stock intervention than after the demise of the buffer stock. The results further indicate that stock-buying operations induced greater stability in producer incomes than buying stock-selling operations.

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    Article provided by Elsevier in its journal Journal of Policy Modeling.

    Volume (Year): 33 (2011)
    Issue (Month): 3 (May)
    Pages: 361-369

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    Handle: RePEc:eee:jpolmo:v:33:y:2011:i:3:p:361-369
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    1. Townsend, Robert M., 1977. "The eventual failure of price fixing schemes," Journal of Economic Theory, Elsevier, vol. 14(1), pages 190-199, February.
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    9. Palaskas, Theodosios & Varangis, Panos, 1989. "Primary commodity prices and macroeconomic variables : a long run relationship," Policy Research Working Paper Series 314, The World Bank.
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    12. Turnovsky, Stephen J, 1976. "The Distribution of Welfare Gains from Price Stabilization: The Case of Multiplicative Disturbances," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(1), pages 133-48, February.
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