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Macroeconomic Impacts On Commercial Farm Incomes In South Africa

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  • Townsend, R.

Abstract

This paper examines the impacts of interest rates, exchange rates and money supply on real net fann incomes in South Africa from 1947-1994. A vector autoregression framework is used for the analysis which places minimal restrictions on the model so the true structure of the relationship can be observed. Long run relationships were established using cointegration and time varying parameters estimated to analyze the macroeconomic impacts at various stages of financial sector reform. The results indicate that the interest rate had the most significant effect on real net fann income which was exacerbated during the reform process. Exchange rates have played a role as a cost of production through imported inputs with the marketing boards being fairly successful at insulating farmers from external demand.

Suggested Citation

  • Townsend, R., 1996. "Macroeconomic Impacts On Commercial Farm Incomes In South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 35(4), December.
    • Handle: RePEc:ags:agreko:267973
    DOI: 10.22004/ag.econ.267973
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    References listed on IDEAS

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    1. Vink, N., 1993. "Entrepreneurs And The Political Economy Of Reform In South African Agriculture," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 32(4), December.
    2. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    3. le Clus, C. F., 1979. "Supply Of Farm Inputs: Cartels Or Free Competition?," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 18(2), April.
    4. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    5. Liebenberg, G. F. & Vivier, F. L. & Groenewald, J. A., 1991. "Exchange Rate Depreciation And Costs Of Agricultural Inputs In South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 30(1), March.
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