An analysis of International Bulfer Stocks for cocoa and copper through dynamic optimization

Seon Lee, David Blandford

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)371-388
Number of pages18
JournalJournal of Policy Modeling
Volume2
Issue number3
DOIs
StatePublished - 1980

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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