Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Objectives of ICAs
Most schemes have as their main objective to stabilize and/or increase the world price of commodity, producers' incomes, foreign exchange earnings of exporting countries and governing revenues from taxes on the commodity. More stable prices are desired because wildly fluctuating prices may cause hardship and are likely to increase the costs of both producers and consumers through increasing uncertainty and producing exaggerated responses in production and consumption. Where these responses are lagged one or more seasons behind the price change they can be particularly damaging in producing 'cobweb' cycles. High current prices for coffee, for example, may stimulate planting of new coffee trees that will only bear fruit five or more years hence when the prices may become, as a result very depressed. More stable earnings for producers becomes a particularly important objective when the producers are small farmers with low incomes and little or no reserves, though most countries have national measures such as marketing boards which try to stabilize producers' earnings. Greater stability in export revenues should reduce uncertainty in economic planning and where taxes are geared to export revenues, as is the case for many primary exports, this objective is reinforced.
The aim of raising prices, incomes or export earnings above the levels that would prevail without intervention has to be seen as a form of disguised economic aid or as compensation for declining terms of trade. The charters of several ICAS also include the aim of expanding the markets for their primary products by developing new uses, reducing trade barriers and increasing sales promotion.
As is often the case in economics, many of these objectives are mutually incompatible. A world price stabilized within narrow limits could cause greater instability in export earnings for some commodities, whereas a raised price may involve lower incomes and will certainly militate against expanded markets. Obviously these possibilities depend on assumptions about elasticities of demand and supply for specific commodities, but are in fact more than likely. For example, where demand shifts are the main cause of fluctuations but demand is price elastic, an export quota agreement will destabilize export earnings. Similarly, where supply variations are the basic cause, holding price stable though a buffer stock can destablise income if the price elasticity of demand is greater than 0.5. a stable price can also involve lower total export earnings. But recently research shows these results are less likely than was previously considered to be the case, particularly if the bank within which a buffer stock seeks to confine price movements is fairly wide. In practice the conflict between price stabilization and stabilization of export earnings for most countries' export earnings is unlikely.
Limitations of Open Market OperationsLimitations For their success central bank open market operation assume that commercial banks in the country will expand their credit port
Explaination of the Marris Model
what kind of market structure is involved for the sale of medicines and vitamins? explain
Goverment Banker, Fiscal Agent and Adviser Central banks in all countries acts as the fiscal agent, banker and adviser on all important financial matters to government of thei
elasticity concepts occupies a central place in policy formulation explain in details
Bank Deposit Bank notes and coins together constitute the currency in circulation. But they form only a part of the total money supply. The larger part of the money supply i
Stable and Unstable Equilibrium An equilibrium is said to be stable equilibrium when economic forces tend to push the market towards it. In other words, any divergence from t
Usually, elasticity of a demand curve throughout its length isn't the same (Fig. below). It varies between 0 and ∞, or in other words, 0 ≤ e p ≥ ∞ In some cases, though, the
Direct Action Direct action in more than one from has been employed by the central banks either as an alternative to their discount rate policy or open market operations or tog
NON-ACCELERATING INFLATION RATE OF UNEMPLOYMENT During 1970s economists encountered a puzzle in the sense that inflation and unemployment data did not fit into the Phi
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd