International monetary policy with commodity buffer stocks

Ussher, Leanne

doi:10.4337/ejeep.2016.01.02

Cited by 8 publications

(4 citation statements)

References 22 publications

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“…For commodity markets, Keynes, Kaldor and others have long argued for buffer stock systems that can dampen the violent price fluctuations inherent in these markets by inducing prices to stay within a certain corridor (Ussher 2016). The use of the Strategic Petroleum Reserves by the US administration, which contributed to the recent reduction in fossil fuel prices, follows this logic.…”

Section: The Firm-level Viewmentioning

confidence: 99%

Sellers’ inflation, profits and conflict: why can large firms hike prices in an emergency?

Weber

Wasner

2023

Review of Keynesian Economics

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The dominant view of inflation holds that it is macroeconomic in origin and must always be tackled with macroeconomic tightening. In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices. Such firms are price makers, but they only engage in price hikes if they expect their competitors to do the same. This requires an implicit agreement which can be coordinated by sector-wide cost shocks and supply bottlenecks. We review the long-standing literature on price-setting in concentrated markets and survey earnings calls and compile firm-level data to derive a three-stage heuristic of the inflationary process: (1) Rising prices in systemically significant upstream sectors due to commodity market dynamics or bottlenecks create windfall profits and provide an impulse for further price hikes. (2) To protect profit margins from rising costs, downstream sectors propagate, or in cases of temporary monopolies due to bottlenecks, amplify price pressures. (3) Labor responds by trying to fend off real wage declines in the conflict stage. We argue that such sellers’ inflation generates a general price rise which may be transitory, but can also lead to self-sustaining inflationary spirals under certain conditions. Policy should aim to contain price hikes at the impulse stage to prevent inflation from the onset.

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Section: The Firm-level Viewmentioning

confidence: 99%

Sellers’ inflation, profits and conflict: why can large firms hike prices in an emergency?

Weber

Wasner

2023

Review of Keynesian Economics

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“…"unfortunately not accepted" (Zhou, 2009). Also, based on the ideas of Keynes, Kaldor and Graham, Ussher and colleagues (2009, 2016 argued that a Commodity Reserve Currency based on buffer stocks was relevant in current circumstances. As their focus was on international monetary policy, the purely buffer-stock aspects of Graham's thinking in particular have been ignored, which may have led to the conclusion that they were relatively unimportant.…”

Section: Emphases In Original)mentioning

confidence: 99%

Benjamin Graham on Buffer Stocks

Woods¹

2021

Preprint

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Surprisingly, Benjamin Graham, the acknowledged “Father of Value Investing”, considered his most important work to be the invention of the Commodity Reserve Currency Plan during the 1930s and 1940s. Previous studies of the Plan have overlooked the fact that, of its three main components (buffer stocks, price stability and currency–backing), Graham regarded the first as the most important and the other two as “secondary” or “subsidiary”. By focusing on the buffer–stock aspect, we demonstrate, first, the breadth and depth of Graham’s overall conception in terms of both micro– and macro-economics and, second, the considerable overlap with Keynes’s ideas developed around the same time, which are manifested particularly in their common conclusion that the inefficiency of commodity markets could be rectified only by government intervention. We also comment on Mehrling’s assessment of Graham as “not any kind of economist at all” (JHET, 2011).

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“…Following the financial crisis of 2007 to 2009, the governor of the People’s Bank of China called for reform of the international monetary system, referring to Keynes’s wartime proposal that was “unfortunately not accepted” (Zhou 2009). Also, based on the ideas of Keynes, Kaldor, and Graham, Leanne Ussher and colleagues (2009, 2016, 2018) argued that a commodity reserve currency based on buffer stocks was relevant in current circumstances. As their focus was on international monetary policy, the purely buffer-stock aspects of Graham’s thinking in particular have been ignored, which may have led to the conclusion that they were relatively unimportant.…”

Section: Introductionmentioning

confidence: 99%

“…Third, as government adviser: CW XXV , CW XXVII, and Fantacci (2017). For discussion of Keynes’s views on the postwar international monetary order and buffer stocks, see Ussher (2009, 2016) and Ussher et al (2018) and references therein.…”

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confidence: 99%

Benjamin Graham on Buffer Stocks

Woods¹

2022

J Hist Econ Thought

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Surprisingly, Benjamin Graham, the acknowledged “Father of Value Investing,” considered his most important work to be the invention of the Commodity Reserve Currency Plan during the 1930s and 1940s. Previous studies of the Plan have overlooked the fact that, of its three main components (buffer stocks, price stability, and currency backing), Graham regarded the first as the most important and the other two as “secondary” or “subsidiary.” By focusing on the buffer-stock aspect, we demonstrate, first, the breadth and depth of Graham’s overall conception in terms of both micro- and macroeconomics, and, second, the considerable overlap with John Maynard Keynes’s ideas developed around the same time, which are manifested particularly in their common conclusion that the inefficiency of commodity markets could be rectified only by government intervention. We also comment on Perry Mehrling’s assessment of Graham as “not any kind of economist at all” (JHET 2011).

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International monetary policy with commodity buffer stocks

Cited by 8 publications

References 22 publications

Sellers’ inflation, profits and conflict: why can large firms hike prices in an emergency?

Sellers’ inflation, profits and conflict: why can large firms hike prices in an emergency?

Benjamin Graham on Buffer Stocks

Benjamin Graham on Buffer Stocks

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