The Overshooting Hypothesis of Agricultural Prices: The Role of Asset Substitutability
AbstractBy allowing for various degrees of asset substitutability between bonds and agricultural products, this paper reexamines the robustness of the overshooting hypothesis of agricultural product prices. It is found, in both a closed economy and an open economy, that the crucial factor determining whether agricultural prices overshoot or undershoot their long-run response following an expansion in the money stock depends upon the extent of asset substitutability between bonds and agricultural goods.
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Bibliographic InfoArticle provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.
Volume (Year): 30 (2005)
Issue (Month): 01 (April)
asset substitutability; commodity prices; overshooting; Demand and Price Analysis;
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