The Determinants of the Demand for Internationally Traded Primary Commodities: the Case of Coffee in Kenya
Abstract
The objective of this paper is to develop and estimate
determinants of coffee demand in the world market, by
considering ways of reducing the variation in coffee exports
to major coffee importing countries. The study focuses on
real exchange rate as a policy variable, coffee prices and
those of coffee substitutes. Real exchange rate was computed
on bilateral level. Five major coffee importing countries \vere
chosen on the basis of their importance as Kenya's coffee
impcrters. The analysis was at a disaggregate level dealing
with one commodity (coffee) and on a bilateral basis. Data
used was annual data covering the period 1963 to 1991.
Chapter one highlights the problem of volume of coffee export
variation and its effects on the economy.
Chapter ~o reviews both the empirical and theoretical
literature surrounding the area of coffee and pri~ary
commodities demand determinants in the world market. Based on
the literature reviewed in chapter.two, an empirical model is ~
developed in chapter Three. A usual commodity demand' modecl
Chapter Four highlights the data type and
sources as well as presenting the regression results of the
model developed In chapter three. In chapter Five, we
summarize the findings and make some policy implications of
the study arising from the analysis of the results in chapter
four. We also discuss the limitations of the study and areas
of further research.
Sponsorhip
The University of NairobiPublisher
University of Nairobi, Department of Economics,