Advanced Search
MyIDEAS: Login to save this article or follow this journal

Responses of Agricultural Prices, Industrial Prices and the Agricultural Terms of Trade to Money Supply Shocks in Bangladesh, 1973M1-2006M6


Author Info

  • Akhand Akhtar Hossain

    (School of Economics, Politics and Tourism, The University of Newcastle, NSW 2308, Australia)


This paper investigates the long-run relationship between money supply, agricultural prices and industrial prices and tests for the proposition that agricultural prices respond to monetary shocks more rapidly than industrial prices and therefore monetary policy may affect the agricultural terms of trade in the short-run, if not in the long-run. The long-run relationship between money supply, agricultural prices and industrial prices is investigated by the Engle-Ganger approach, the Johansen approach and the Autoregressive Distributed Lag bounds testing approach. The cointegration and error-correction tests results suggest that there exists a cointegral relationship between money supply, agricultural prices and industrial prices. The results obtained by the bounds testing approach are not consistent with the monetary neutrality proposition. The Wald test results suggest that the long-run coefficient on the money stock (narrow or broad) in the sectoral or the general price level relationship is significantly lower than one. The long-run coefficient on the money stock (narrow or broad) in the agricultural price relationship is also higher than that in the industrial price relationship, implying that an increase in the money supply has a long-run positive effect on the agricultural terms of trade. Finally, the Granger (predictive) causality test results and the impulse response analysis within a 3-variable vector error-correction modeling framework suggest that agricultural prices respond to monetary shocks more rapidly than industrial prices, implying that monetary shocks have a short run positive impact on the agricultural terms of trade.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

Volume (Year): 43 (2008)
Issue (Month): 1 (December)
Pages: 287-314

as in new window
Handle: RePEc:dse:indecr:v:43:y:2008:i:1:p:287-314

Contact details of provider:
Postal: University of Delhi, Delhi 110 007
Phone: 91-11-2766-6533/34/35, 2766-6703/04/05
Fax: +91-11-7667159
Web page:
More information through EDIRC

Order Information:

Related research

Keywords: Agricultural prices; industrial prices; agricultural terms of trade; monetary shocks; cointegration; error-correction; bounds testing; Granger (predictive) causality;

Find related papers by JEL classification:


No references listed on IDEAS
You can help add them by filling out this form.


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hossain, Akhand Akhtar, 2008. "The Agricultural and the External (Net Barter) Terms of Trade in Bangladesh: Trends, Movements and Relationships, 1952-2006," Review of Applied Economics, Review of Applied Economics, vol. 4(1-2).


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:dse:indecr:v:43:y:2008:i:1:p:287-314. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pami Dua).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.