The name is absent

included for 1966-1988, since rebates were only issued in this period. Other dummies were
included for the periods 1965-71 and 1972-79.²³ The coefficients on PSANTOS4 and PCOMPETITOR
are positive and negative, respectively, and highly significant, as expected. None of the
dummies are significant, though all are positive. The equation for Alpha was estimated using a
first-order autoregressive transformation since the initial regression had a high DW statistic. The
autoregressive term is highly significant.

In the equation for relative coffee supply, the dependent variable is again specified as the
unexpected difference in Brazilian supply relative to that of its competitors. In this equation, the
estimated coefficients on PSANTOS4 and PCOMPETITOR are positive and negative, as expected, and
highly significant, suggesting that a higher price of coffee brought forth (primarily from storage)
a higher supply of coffee of each type. Although hardly any of the variation in the supply
variable is explained, it is worth repeating that the coefficients on relative supply in the equations
explaining the price of Brazilian coffee and those of its competitors are significant and have the
expected signs.²⁴

Given some uncertainty whether the supply variable was appropriately specified, I also
estimated a three-equation system, excluding the equation for relative coffee supply. The results
for these three equations, not shown, were largely the same as those in Table 3. The coefficients
on Alpha in the equation for PSANTOS4 were about 20% smaller, while the coefficients on Alpha
in the equations for PCOMPETITOR were somewhat larger in absolute magnitude, but still negative
in sign, and their t statistics were higher. These results suggested a greater possibility that
additional resources to foreign importers at higher fiscal cost.

²³ I tried a dummy for the period 1980-81, but its inclusion caused the coefficients on PSANTOS and PCOMPETITOR to
become insignificant.

²⁴ I also tried using the amount of Brazilian coffee exported relative to the aggregate amount of coffee exported by
its Latin American competitors. A larger amount of the variance in the dependent variable was explained when this
supply variable was used, but the coefficients on the relative supply variable were generally insignificant in the

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