Price Stabilization on World Agricultural Markets

This book contains both a theoretical analysis of (supply)price stabilization on world agricultural markets and aneconometric investigationof recent sugar market policies. The theoretical part explicitly considers the effects ofprotected domestic markets: It shows price stabilization tobe generally desirable and provides a proof for thenon-existence of rational expectations equilibria on theworld market in a model with inelastic excess supply. Theempirical analysis assesses the effects of the InternationalSugar Agreements of 1968 and 1977. Quota-mechanisms intendedto limit sugar exports are found to have raised the averageworld market price. A reduction in the price's variance, however, is not conceivable. In general, quota agreementsseemto be an inapppropriate instrument of pricestabilization, as they lack a stable equilibriuminterpretation. The method of analysis is time serieseconometrics with particular attention on unit root andcointegration issues. Tests for structural change emplopyedin orderto single out possible effects of the InternationalSugar Agreements.