Managing Commodity Booms-And Busts

by Panos Varangis, Donald Mitchell, Takamasa Akiyama

This booklet focuses on the management of the commodity price volatility from the perspective of developing countries. It examines and contrasts government policies and institutional and marketing structures that have proven to be effective in managing commodity booms and busts. In developing countries dependent on a few commodities for their exports, booming commodity markets can be beneficial or detrimental depending on how they manage the windfalls. Two key problems need to be the fluctuations in income, and transitory bonanzas in foreign exchange earnings. The second effect, in particular, is likely to cause the exchange rate to appreciate above its long-term sustainable level.

22 pages, Paperback

First published January 1, 1995