BETTER PRICE FORECASTS WITH INTERNATIONAL BUFFER STOCKS?: A BOX/JENKINS APPROACH FOR THE 1980 INTERNATIONAL COCOA AGREEMENT Available to Purchase

Price stabilization in international commodity markets is a main element of the North‐South dialogue. Within the Integrated Programme on Commodities (IPC) of UNCTAD, it is intended to create buffer stocks for 10 core commodities: sugar, natural rubber, cocoa, coffee, tea, cotton, jute, hard fibres, copper, and tin. Several theoretical studies justify these plans by stressing the positive effects of a functioning buffer stock scheme on different economic goals. It is argued that price stabilization will, “potentially at least, improve aggregate welfare” (Turnovsky, 1978, p. 143) and that risk benefits in the case of risk‐averse producers “will be far more important” (Bigman, 1982, p. 1984; on the concept, see Newbery/Stiglitz, 1981, pp. 267 et seq.) than the transfer benefits, if income uncertainty is reduced by the stabilization policy. Other positive effects of buffer stocks are stressed with respect to food security (Bignan, 1982, pp. 129 et seq.) and, except for the case of supply‐induced fluctuations and a price elastic import demand, with respect to the stability of export earnings (Nguyen, 1980, pp. 343 et seq.). The export earnings stabilizing effect as well as a mostly earnings‐raising effect is confirmed for several core commodities by simulation analyses (Behrman/Ramangkura, 1978, p. 166) and by dynamic optimization (Lee/Blandford, 1980, p. 385). Moreover, stable export earnings of less developed countries (LDCs) are expected to induce higher growth rates of GNP than unstable ones (Lim, 1976, pp. 311 et seq.).