IDEAS home Printed from https://ideas.repec.org/p/ags/eaa123/122543.html
   My bibliography  Save this paper

Volatility in Agriculture Commodity Prices in India: Impact and Macroeconomic and Sector-Specific Policy Responses

Author

Listed:
  • Bathla, Seema

Abstract

Globalization and trade liberalization have exposed agricultural sector of many developing countries to sudden disturbances, caused not just by demand-supply conditions within their economies but also by volatility in global commodity prices, exchange rate and surge in imports. This paper evaluates the magnitude of sensitivity of Indian agriculture to these factors, and explores policy options that may neutralize their adverse effects, maintain price incentives and stability. The analysis is undertaken for one important tradable commodity viz. wheat by applying a structural econometric model, separately under the exportable and importable scenarios from 1980-81 to 2009-10. Findings reveal wheat to be increasingly driven by an incentive structure based on its linkages with world price, exchange rate and other factors. Counterfactual simulation experiments indicate that due to trade and sector-specific policies, wheat price and output tend to be much more resilient to fluctuations in international price and other shocks compared to its exports and imports.

Suggested Citation

  • Bathla, Seema, 2012. "Volatility in Agriculture Commodity Prices in India: Impact and Macroeconomic and Sector-Specific Policy Responses," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122543, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa123:122543
    DOI: 10.22004/ag.econ.122543
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/122543/files/Bathla.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.122543?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. NR, Bhanumurthy & Kumawat, Lokendra, 2009. "External Shocks and the Indian Economy: Analyzing through a Small, Structural Quarterly Macroeconometric Model," MPRA Paper 19776, University Library of Munich, Germany.
    2. Mamingi, Nlandu, 1996. "How prices and macroeconomic policies affect agricultural supply and the environment," Policy Research Working Paper Series 1645, The World Bank.
    3. Schiff, Maurice*Valdes, Alberto, 1998. "Agriculture and the macroeconomy," Policy Research Working Paper Series 1967, The World Bank.
    4. Ardeni, Pier Giorgio & Freebairn, John, 2002. "The macroeconomics of agriculture," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 28, pages 1455-1485, Elsevier.
    5. MB Kaabia & JM Gil, 2000. "Short- and long-run effects of macroeconomic variables on the Spanish agricultural sector," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(4), pages 449-471, December.
    6. Lassaad Lachaal & Abner W. Womack, 1998. "Impacts of Trade and Macroeconomic Linkages on Canadian Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 534-542.
    7. Bhattacharya, & Kar, Sabayasachi, 2007. "Macroeconomic Reforms, Growth, and Stability," OUP Catalogue, Oxford University Press, number 9780195684193, Decembrie.
    8. Dasgupta, Dipak & Dubey, R.N. & Sathish, R, 2011. "Domestic Wheat Price Formation and Food Inflation in India," MPRA Paper 31564, University Library of Munich, Germany.
    9. Andrew McKay & Oliver Morrissey & Charlotte Vaillant, 1998. "Aggregate Export and Food Crop Supply Response in Tanzania," Discussion Papers 98/4, University of Nottingham, CREDIT.
    10. G. Edward Schuh, 1974. "The Exchange Rate and U. S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(1), pages 1-13.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Baruah, Prerona, 2021. "Seasonality in Commodity Prices across India:Extent and Implications," 2021 Conference, August 17-31, 2021, Virtual 315338, International Association of Agricultural Economists.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bathla, Seema, 2011. "Resilience of Indian agriculture to external shocks: Analyzing through a structural econometric model," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 14, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    2. Bakucs, Lajos Zoltan & Ferto, Imre, 2005. "Monetary Impacts and Overshooting of Agricultural Prices in a Transition Economy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24711, European Association of Agricultural Economists.
    3. Yoon, Jongyeol & Brown, Scott, 2017. "Examination of asymmetric supply response in the U.S. livestock industry," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252779, Southern Agricultural Economics Association.
    4. Bakucs, Lajos Zoltan & Ferto, Imre, 2005. "The Influence of Macroeconomic Variables on the Hungarian Agriculture," 2005 Annual meeting, July 24-27, Providence, RI 19232, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Runge, C. Ford, 2006. "Agricultural Economics: A Brief Intellectual History," Staff Papers 13649, University of Minnesota, Department of Applied Economics.
    6. 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.
    7. Schiff, Maurice*Valdes, Alberto, 1998. "Agriculture and the macroeconomy," Policy Research Working Paper Series 1967, The World Bank.
    8. Cho, Guedae & Kim, MinKyoung & Koo, Won W., 2003. "Relative Agricultural Price Changes In Different Time Horizons," 2003 Annual meeting, July 27-30, Montreal, Canada 22249, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Barrett, Christopher B., 1999. "The effects of real exchange rate depreciation on stochastic producer prices in low-income agriculture," Agricultural Economics, Blackwell, vol. 20(3), pages 215-230, May.
    10. Siami-Namini, Sima & Hudson, Darren & Trindade, A. Alexandre & Lyford, Conrad, 2018. "Commodity Prices, Monetary Policy and the Taylor Rule," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266719, Southern Agricultural Economics Association.
    11. William Edmondson & Matthew Shane & Agapi Somwaru, 2007. "Global Macroeconomic Shocks and U.S. Agriculture: An Interactive Matrix Approach," EcoMod2007 23900022, EcoMod.
    12. Longjiang Chen, 2011. "The effect of China's RMB exchange rate movement on its agricultural export: A case study of export to Japan," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(1), pages 26-41, January.
    13. Petit, Michel, 1988. "Presidential Address," 1988 Conference, August 24-31, 1988, Buenos Aires, Argentina 183061, International Association of Agricultural Economists.
    14. Sen Gupta, Abhijit & Bhattacharya, Rudrani & Rao, Narhari, 2014. "Understanding Food Inflation in India," MPRA Paper 58319, University Library of Munich, Germany.
    15. Sayef Bakari, 2017. "The Impact of Vegetables Exports on Economic Growth in Tunisia," Economic Research Guardian, Weissberg Publishing, vol. 7(2), pages 72-87, December.
    16. Andino, Jose & Mulik, Kranti & Koo, Won W., 2005. "The Impact Of Brazil And Argentina'S Currency Devaluation On U.S. Soybean Trade," Agribusiness & Applied Economics Report 23486, North Dakota State University, Department of Agribusiness and Applied Economics.
    17. Akbar, Muhammad & Ahmad, Eatzaz, 2021. "Repercussions of exchange rate depreciation on the economy of Pakistan: Simulation analysis using macroeconometric model," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 574-600.
    18. Abiola John Asaleye & Rotdelmwa Filibus Maimako & Adedoyin Isola Lawal & Henry Inegbedion & Olabisi Popoola, 2021. "Monetary Policy Channels and Agricultural Performance: Evidence from Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(3), pages 205-218, March.
    19. Richard E. Just & Gordon C. Rausser, 1989. "An Assessment of the Agricultural Economics Profession," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(5), pages 1177-1190.
    20. Binswanger, Hans P, 1974. "A Microeconomic Approach to Induced Innovation," Economic Journal, Royal Economic Society, vol. 84(336), pages 940-958, December.

    More about this item

    Keywords

    International Relations/Trade; Risk and Uncertainty;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:eaa123:122543. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.