An analysis of International Bulfer Stocks for cocoa and copper through dynamic optimization |
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Authors: | Seon Lee |
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Affiliation: | Korea Development Institute, Korea;Cornell University, USA |
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Abstract: | Optimal control theory is used to analyze buffer stock price stabilisation. Linear econometric models of the world cocoa and copper markets are estimated over the period 1956-75 and the simulated to determine the “systematic” price for each commodity—the price when stochastic sources of market variation are suppressed. Stabilization at this price reduces the instability of producer revenue and also increases total revenue for both commodities. However, the buffer stocks are expensive. Net costs over the period 1966-76 are estimated at $1.7 billion for cocoa and $0.9 billion for copper. |
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Keywords: | Address Correspondence to: David Blandford Department of Agricultural Economics 205 Warren Hall Cornell University Ithaca NY 14853 |
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