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

Ferrarini, Benno and Bargawi, Hannah and Newman, Susan A. and Bova, Elva, Low-Income Countries and Commodity Price Volatility (April 8, 2008). 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), Available at SSRN: https://ssrn.com/abstract=2247137

Benno Ferrarini (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Hannah Bargawi

Independent ( email )

Susan A. Newman

Independent ( email )

Elva Bova

Independent ( email )

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