ABSTRACT
This chapter examines the open-macro-economic effect of stabilized intervention by an intergovernmental scheme. It aims to meet the need for studies on the broader-based effects of intervention through buffer stock operation. The chapter presents a modified Van Duyne model. It discusses the model which is used to ascertain the intervening effects from an open-macro-economic point of view. The international commodity agreement has several intervening techniques to carry out its aims such as buffer stocks, multilateral contracts, and export restriction schemes. The international commodity agreement releases the stock to lower the free market price when the latter rises above the ceiling level of the range. Stocks equilibrated in asset markets in monetary terms can be equilibrated in real terms through adjustments in goods markets. Under the terms of the stock scheme, participating countries contribute to the fund and so establish a buffer stock.
