Can Commodity Price Stabilisation Yield Macroeconomic Benefits?
Commodity price stabilisation schemes have always been an important item on the international economic policy agenda. One of the most famous schemes was designed by Keynes in 1942, as a companion to his International Clearing Union (which later became the IMF). He proposed “Commod Control”, an agency charged with stabilising commodity prices. Keynes’ arguments for such an agency (in a series of wartime memoranda) met with considerable political opposition and had to be shelved. More recently, the same fate has befallen UNCTAD’s attempts to establish “Commod Control” through their Integral Program for Commodities. In a recent CEPR Discussion Pape,r Research Fellows Ravi Kanbur and David Vines analyse the Keynesian case for international commodity price stabilisation schemes. David Newbery and Joseph Stiglitz have recently suggested that the case for such buffer stock schemes is weak – they argue that the benefits are small relative to costs, that they are unevenly distributed, and in an
