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Relative Agricultural Prices and Monetary Policy

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  • John S. Lapp

Abstract

An imperfect information, rational expectations model of relative price determination is presented. This model provides an econometric specification for testing for a causal relationship between money and the relative prices of agricultural commodities. Test results indicate that variations in the growth rate of the nominal money supply (whether anticipated or unanticipated) have not been an important influence on the average level of prices received by farmers relative to other prices in the economy over the period 1951–85.

Suggested Citation

  • John S. Lapp, 1990. "Relative Agricultural Prices and Monetary Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 622-630.
    • Handle: RePEc:oup:ajagec:v:72:y:1990:i:3:p:622-630.
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    File URL: http://hdl.handle.net/10.2307/1243032
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    Cited by:

    1. V. H. Smith & J. S. Lapp, 1993. "Relative Price Variability Among Agricultural Commodities And Macroeconomic Instability In The United Kingdom," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 272-283, May.
    2. Awokuse, Titus O., 2005. "Impact of Macroeconomic Policies on Agricultural Prices," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(2), pages 1-12, October.
    3. Goodness C. AYE & Rangan GUPTA, 2012. "The Effects Of Monetary Policy On Real Farm Prices In South Africa," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(1), pages 147-158.
    4. Jiawu Dai & Liurui Deng & Lan Yang, 2021. "Testing the absorber hypothesis of exchange rates for the overshooting of agricultural prices in China," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(8), pages 327-336.
    5. CHINEZELUM Ezebilo & AKANEGBU Benedict & MUHAMMAD Maimuna Yakubu, 2023. "Effect of Monetary Policy on Food Inflation in Nigeria: A Nardl Structural Approach," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(5), pages 1-6.
    6. AlShawa, Alaa Kamal, 1999. "Identifying the effects of monetary policy shocks on the farm sector," ISU General Staff Papers 1999010108000013546, Iowa State University, Department of Economics.
    7. repec:kap:iaecre:v:11:y:2005:i:1:p:111-119 is not listed on IDEAS
    8. Saghaian, Sayed H. & Reed, Michael R., 2014. "The Impact Of The Recent Federal Reserve Large-Scale Asset Purchases On The Agricultural Commodity Prices: A Historical Decomposition," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(2), pages 1-16, April.
    9. Fenyes, Tamas I. & Meyer, Nicolas G., 1998. "Agricultural Policy And Macroeconomic Issues In South Africa In Perspective," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 37(1), pages 1-23, March.
    10. Tai, Meng-Yi & Chao, Chi-Chur & Hu, Shih-Wen & Lai, Ching-Chong & Wang, Vey, 2014. "Monetary policy and price dynamics in a commodity futures market," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 372-379.
    11. Lai, Ching-Chong & Hu, Shih-Wen & Fan, Chih-Ping, 2005. "The Overshooting Hypothesis of Agricultural Prices: The Role of Asset Substitutability," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(1), pages 1-23, April.
    12. Saghaian, Sayed & Reed, Michael, 2015. "Spillover Effects Of U.S. Federal Reserve’S Recent Quantitative Easing On Canadian Commodity Prices," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 3(1), pages 1-33, January.
    13. Michael T. Belongia, 1991. "Monetary policy and the farm/nonfarm price ratio: a comparison of effects," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 30-46.
    14. Dorfman, Jeffrey, 2015. "Rising Interest Rates Won't Be Good for Commodity Prices, But It Won't Be Too Bad Either," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 5, December.
    15. Md Rafayet Alam & Scott Gilbert, 2017. "Monetary policy shocks and the dynamics of agricultural commodity prices: evidence from structural and factor†augmented VAR analyses," Agricultural Economics, International Association of Agricultural Economists, vol. 48(1), pages 15-27, January.
    16. Muhammad AKBAR & Abdul JABBAR, 2017. "Impact of macroeconomic policies on national food security in Pakistan: simulation analyses under a simultaneous equations framework," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(10), pages 471-488.
    17. Sun, Zhining & Katchova, Ani, 2023. "Impact of Interest Rates on Agricultural Commodity Price Dynamics," 2023 Annual Meeting, July 23-25, Washington D.C. 335682, Agricultural and Applied Economics Association.
    18. Alan G. Isaac & David E. Rapach, 1996. "Monetary Shocks and Real Farm Prices: A Re-Examination," Others 9602001, University Library of Munich, Germany.
    19. Ioanna Reziti, 2005. "The Relationship Between Macroeconomic Variables and Relative Price Variability in Greek Agriculture," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(1), pages 111-119, February.
    20. Jahantigh , Forough & Rahmi Ghasemabadi , Mohammad & Jalali , Omolbanin, 2018. "The Impact of Monetary Policy Shock on the Price of Storable Goods: A Case Study of Food," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 13(4), pages 471-490, October.
    21. Kim, Jihae & Kim, Soyoung, 2021. "Monetary policy shocks and delayed overshooting in farm prices and exchange rates," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 620-628.
    22. Yu, Xiaohua, 2014. "Monetary easing policy and long-run food prices: Evidence from China," Economic Modelling, Elsevier, vol. 40(C), pages 175-183.

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