Using Markets to Deal with Commodity Price Volatility : What Can Governments and Donors Do to Develop Markets that Ameliorate Commodity Price Volatility?

Commodities are often at the heart of local and sometimes national economies. Commodity prices are notoriously volatile, creating instability and uncertainty for commodity-dependent developing countries. Commodity price instability undermines economic growth and skews the distribution of income. As a result, nearly every government has tried to manage commodity price risks. This Note discusses different sets of commodity pricing policies and the barriers to their risk management