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A THEORETICAL DISCUSSION OF THE ECONOMIC EFFECTS OF BUFFER STOCKS AND BUFFER FUNDS
Author(s) -
Simmons Phil
Publication year - 1988
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1988.tb00680.x
Subject(s) - buffer (optical fiber) , buffer stock scheme , intervention (counseling) , welfare , business , economics , computer science , microeconomics , market economy , telecommunications , psychology , psychiatry
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.