Does FEPA isolate the Colombian local sugar
price from international shocks?
Abstract
Since January 2001, local sugar prices in Colombia are subject to a stabilization
scheme called FEPA (
Fondo de Estabilización de Precios del Azúcar
).
The
Colombian government designed FEPA as a part of a mechanism to protect local
producers from fluctuations in international sugar prices. Our objective is to
determine whether the FEPA succeeded in isolating the local price from the
international price’s
fluctuations. In other words, the aim of this document is to
determine whether or not a long
-
term relationship exists between international sugar
prices and their counterparts in the three main Colombian cities.
