Paper Title :Dynamics of Price Stabilization: Continuous- Versus Discrete-Time Cobweb Models With Buffer Stock
Author :Anokye, Martin, Oduro, T. Francis
Article Citation :Anokye ,Martin ,Oduro ,T. Francis ,
(2017 ) " Dynamics of Price Stabilization: Continuous- Versus Discrete-Time Cobweb Models With Buffer Stock " ,
International Journal of Management and Applied Science (IJMAS) ,
pp. 44-51,
Volume-3,Issue-10
Abstract : This paper compared the dynamics of continuous-time nonlinear delay differential cobweb model with buffer
stock to discrete-time nonlinear cobweb model with buffer stock, through simulation of real economic data of maize price
demand and production in the Ashanti Region of Ghana. The nonlinear delay differential equation model, before the
application of buffer stock scheme had price oscillated between two price points and could not converge, which affirms the
condition of nonlinear model under naïve price expectation. It is established in the study that delay parameter is price
stability dependent and also associated with price fluctuations. The nonlinear delay differential buffer stock model achieved
price stability without varying the parameters values of supply function as opposed to discrete-time cobweb models.It was
noted that, the more buffer stock delay and supply delay are well adjusted in connection with the price scheme run by buffer
stock operators, the more stable the price becomes and the impact of buffer stock felt in the system. The results of the
analysis provided an average stable price of maize as GH¢ 30.49 compared to the actual average price of GH¢30.27, which
in turn determined the average stock during harvesting season. Nonlinear discrete-time cobweb model on the other hand,
could not meet the naïve price expectation condition until parameter values were reviewed. This made the predicted values
of average price and stock unrealistic. It was found that, discrete-time buffer stock model performed well under linear
models than in the nonlinear models, which is a limiting case of the delay buffer stock model used in this study. It is
therefore, presumed from the study that researchers would rather use continuous-time nonlinear delay models as they reflect
realities prevailing in most market economic problems.
Keywords- buffer stock, price stabilization, delay-differential equation, cobweb models
Type : Research paper
Published : Volume-3,Issue-10
DOIONLINE NO - IJMAS-IRAJ-DOIONLINE-9757
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Published on 2018-01-03 |
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