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Abstract
A dynamic rational expectation storage models was developed
to represent the Brazilian corn market in the late 90’s. In theses years the
Brazilian agricultural price policy changed from a buffer stock scheme
to a producer price subsidy (Prêmio para Escoamento de Produto – PEP)
and the Brazilian market was open to international trade. The model
was estimated through stochastic dynamic programming.
The results show that with open markets, exports and imports play the
role of shocks absorbers, played by storage in closed economies. Results
suggest that the producer price subsidy policy may lead the country to be
an exporter, depending on the relative values between minimum price
and export price at the cost of ever increasing government expenditures.