The volatile coffee price and its effects on Guatemala’s economy

The purpose with this thesis is to determine the effects of a volatile coffee price on Guatemala’s export revenues and analyze the effects on the economic growth. The scope for the thesis is based upon the current situation on the coffee market. The price on coffee has not been as low as it is today in more than a century. This situation is causing large problems in a country like Guatemala when the crop accounts for 22,9 percent of the total export revenues. To reveal the effects of a volatile coffee price on the export revenues I use a multiple regression model where the export revenues is the dependent variable and the price on coffee, exchange rate and the quantity of coffee produced in Guatemala as the independent variables. The conclusion is that the volatile coffee price has a large effect on the revenues. If the coffee price rises with 1 percent, export revenues will rise with 1,089 percent, ceteris paribus. The economic growth in Guatemala is also dependent on the coffee production and if the coffee price is low, Guatemala will have a slower economic growth.Validerat; 20101217 (root