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The effects of real exchange rate depreciation on stochastic producer prices in low-income agriculture

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  • Barrett, Christopher B.

Abstract

This paper considers the effects of real exchange rate depreciation on stochastic agricultural producer prices in low-income agriculture. Conventional wisdom, that real depreciation achieved through nominal currency devaluation stimulates tradables production, does not universally hold in the presence of stochastic prices. In fact, real depreciation is only stimulative in two cases - importables that remain importable and nontradables that become exportable. GARCH estimation of time-series price data on several commodities from Madagascar support the hypotheses generated by the analytical model. © 1999 Elsevier Science B.V. All rights reserved.

Suggested Citation

  • Barrett, Christopher B., 1999. "The effects of real exchange rate depreciation on stochastic producer prices in low-income agriculture," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 20(3), May.
  • Handle: RePEc:ags:iaaeaj:174977
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    References listed on IDEAS

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    Cited by:

    1. Torben G. Andersen & Tim Bollerslev & Peter F. Christoffersen & Francis X. Diebold, 2005. "Volatility Forecasting," PIER Working Paper Archive 05-011, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    2. Paul Caskie, 2000. "Back to Basics: Household Food Production in Russia," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 196-209.
    3. Andersen, Torben G. & Bollerslev, Tim & Christoffersen, Peter F. & Diebold, Francis X., 2006. "Volatility and Correlation Forecasting," Handbook of Economic Forecasting, Elsevier.
    4. Meyer, Ferdinand H. & Westhoff, Patrick C. & Binfield, Julian C.R. & Kirsten, Johann F., 2006. "Model closure and price formation under switching grain market regimes in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(4), December.
    5. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.

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