Monetary Impacts and Overshooting of Agricultural Prices in a Transition Economy: The Case of Hungary
AbstractThis article examines the impacts of monetary policy on agricultural prices in the Hungarian economy using time series analysis. The empirical results indicate that agricultural prices adjust faster to monetary shocks than industrial prices do, affecting relative agricultural prices in the short run, but strict long-run money neutrality does not hold. We also find that the exchange rate as a flexible sector variable, adjusts faster to temporary shocks than the sticky, industrial prices. This implies that in a case of monetary shocks the agricultural sector associated with flexible changes bears the burden of adjustment vis-à-vis the sectors with sticky changes. These macroeconomic effects are reflected in real agricultural price volatility and the agricultural sector by reducing the financial viability of the farmers.
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51798.
Date of creation: 2009
Date of revision:
Overshooting of agricultural prices; money neutrality; cointegration; transition economy; Agricultural and Food Policy; Demand and Price Analysis; Production Economics;
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