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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Anatomy of a Temporary Trade Shock: The Kenyan Coffee Boom of 1976-79
Authors:Bevan, David L.ISNI
Collier, PaulISNI
Gunning, J. WillemISNI
Periodical:Journal of African Economies
Geographic term:Kenya
Economics and Trade
External link:https://jae.oxfordjournals.org/content/1/2/271.full.pdf
Abstract:The Kenyan coffee boom of 1976-1979 was an archetypal temporary external shock. A central theme of this study is the extent to which assets were used to convert a large temporary shock into a small permanent shock. The authors show that overall the economy achieved quite a high savings rate from this windfall. Whereas the private sector had a very high windfall savings rate, the government did not. A second theme is the consequences for goods markets. The static analysis of Dutch disease, in which the key disaggregation is between tradable and nontradable goods, is refined by a further disaggegration into capital and consumer goods. The coffee boom led to a massive increase in the demand for nontradable capital goods, giving rise to a construction boom. Construction prices were pushed up and the timing and composition of government expenditure accentuated the construction boom. The authors suggest that the high windfall savings were inefficiently converted into real assets. A third theme is that the responses of private agents were heavily constrained by the regulatory environment. As with public expenditure, the control regime caused inefficiency in the conversion of savings into real assets. Bibliogr., notes, ref., sum.