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Modelling Thirty Five Years of Coffee Prices in Brazil, Guatemala and India and the Law of One Price

Anindya Banerjee (), Sushil Mohan () and Bill Russell ()

Discussion Papers from Department of Economics, University of Birmingham

Abstract: The standard approach to modelling coffee prices ignores the impact that changes in government policies and market structures has on coffee prices. These changes have led to large structural breaks in coffee prices implying the standard estimates are biased. This paper models coffee princes in Brazil, Guatemala and India allowing for the structural breaks. The estimated model provides a consistent description of coffee prices and shows that liberalisation has benefited producers substantially in terms of a higher share of the world price of coffee. We also show that producers have benefited from higher real coffee prices following liberalisation.

Keywords: coffee prices; cointegration; coffee markets; liberalisation; coffee producers; transfer costs; law of one price (search for similar items in EconPapers)
JEL-codes: Q11 Q17 Q18 C32 C52 F13 F14 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2010-07
New Economics Papers: this item is included in nep-agr and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:bir:birmec:10-22

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