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Storage and the Volatility of Agricultural Prices: A Model of Endogenous Fluctuations

Author

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  • Sophie Mitra

    (Fordham University, Department of Economics)

  • Jean-Marc Boussard

    (Institut National de Recherche en Agronomie (INRA))

Abstract

Recent developments in world food markets stress the importance of identifying the sources of food price volatility. This paper develops a nonlinear Cobweb model with endogenous volatility which accounts for several characteristics of agricultural commodity markets (seasonality, storage) and leads to price series with positive skewness and autocorrelation, as in actual commodity prices. Practical consequences may imply a rethinking of the current methods of world food market regulation.

Suggested Citation

  • Sophie Mitra & Jean-Marc Boussard, 2008. "Storage and the Volatility of Agricultural Prices: A Model of Endogenous Fluctuations," Fordham Economics Discussion Paper Series dp2008-11, Fordham University, Department of Economics.
    • Handle: RePEc:frd:wpaper:dp2008-11
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    References listed on IDEAS

    as
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    Cited by:

    1. Thomas Barré, 2011. "Price expectations and price dynamics: the case of the rice sector in developing Asia," Working Papers hal-00630711, HAL.
    2. Thomas Barré, 2011. "Price expectations and price dynamics: the case of the rice sector in developing Asia," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00630711, HAL.
    3. Ashutosh Vashishtha, 2020. "Cobweb price dynamics under the presence of agricultural futures market: theoretical analysis," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(2), pages 131-162, June.

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    More about this item

    Keywords

    Agricultural prices; nonlinear Cobweb model; endogenous fluctuations; storage;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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