Abstract for: A System Dynamics Model for the World Coffee Market

Commodity prices cycles have a negative effect in developing countries. This paper applies system dynamics to study the long term cyclical behavior of coffee price. The model is based in Meadows (1970) and Deaton and Laroque (1996, 2003). The model includes the price dynamics, investments, capacity, and demand. Our model is the first stages and not fully calibrated. Nevertheless, the model provides a better understanding of the commodity cycles, focusing on the internal structure of the system. The model replicates the reference mode, thus, coffee price exhibits cyclical behavior in the long term. In particular, we have founded very difficult the estimation of investment functions; therefore, future work will be focus on validation and use of laboratory experiments to estimate investment function with coffee farmers.