Low-Income Countries and Commodity Price Volatility
In Thomas Cottier and Panagiotis Delimatsis (editors), The Prospects of International Trade Regulation - From Fragmentation to Coherence. Cambridge University Press, 2011. ISDN-13: 9781107004870. (with H. Bargawi, E. Bova, S. Newman)
Posted: 10 Apr 2013
Date Written: April 8, 2008
Abstract
The study assesses the factors underlying commodity price volatility, its impact on households welfare, and the implications for macroeconomic and fiscal policy. It finds that: (i) low-income countries are highly vulnerable to fluctuations in commodity prices; (ii) financial speculation has caused price volatility in the international markets beyond waht could possibly be explained on the grounds of fundamentals of supply and demand alone; (iii) sound market structures and institutions need to be in place for producers, households and villages to cope with price shocks; (iv) low-income countries require international support targeting supply-side constraints, together with the establishment of a financing scheme compensating the effect of price shocks, premised on sound governance and macroeconomic policy.
Keywords: Commodity Price Volatility, Price Transmission, Commodity Exchange Rate Policy, Contingent Debt Mechanism, Copper, Coffee, Cotton
JEL Classification: D10, E37, F42, H63
Suggested Citation: Suggested Citation