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The Influence of Domestic Pricing Policies and Buffer Stocks on Price Stability in the World Wheat Industry
Author(s) -
Zwart A. C.,
Meilke K. D.
Publication year - 1979
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1239429
Subject(s) - buffer stock scheme , economics , commodity , intervention (counseling) , commodity market , stock (firearms) , monetary economics , financial economics , microeconomics , market economy , finance , mechanical engineering , psychology , psychiatry , engineering
Domestic pricing policies are a major cause of instability in international commodity markets. The modification of such policies could be a viable alternative to buffer stocks in providing stability. A theoretical model of price intervention is developed to show how common forms of intervention destabilize the world market price. A stochastic econometric model is used to show, first, that most countries in the world wheat market have policies which destabilize the wheat market, and, second, that the modification of such policies would prove as effective as a buffer stock policy in stabilizing the wheat market.