| Abstract: | Simulations of a global coffee model incorporating a vintagecapital approach to production are run. Over the recent periodof operation of the International Coffee Agreement's exportquota system, the authors find that the quota system had a stabilizingeffect on world coffee prices. The quotas reduced real exportrevenues for most small exporting countries, but large producersgained. Most small countries gained, however, in terms of riskreduction. If a brief suspension of the quota occurs from timeto time, caused, for example, by adverse weather which resultsin a shortfall in world supply, the quota system works likea buffer stock scheme; on average, producing countries as awhole lose transfer benefits but gain risk benefits. |
