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Agricultural Commodity Prices and Exchange Rates under Structural Change

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  • Hatzenbuehler, Patrick L.
  • Abbott, Philip C.
  • Foster, Kenneth A.

Abstract

That exchange rates strongly influence agricultural commodity prices is a widely held belief. Observed divergences in price and exchange rate correspondence over time, however, have occasionally brought this conventional wisdom into doubt. We empirically test and find evidence to support hypotheses that key supply-use factors, such as low stocks and policy shifts, intermittently cause greater responsiveness of agricultural commodity prices to exchange rate changes because they give rise to more inelastic market demand. After accounting for these longrun effects, we also find that short-run price responsiveness to exchange rate changes is sometimes greater due to overshooting factors.

Suggested Citation

  • Hatzenbuehler, Patrick L. & Abbott, Philip C. & Foster, Kenneth A., 2016. "Agricultural Commodity Prices and Exchange Rates under Structural Change," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.
  • Handle: RePEc:ags:jlaare:235153
    DOI: 10.22004/ag.econ.235153
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    References listed on IDEAS

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    Cited by:

    1. Krzysztof Drachal, 2019. "Analysis of Agricultural Commodities Prices with New Bayesian Model Combination Schemes," Sustainability, MDPI, Open Access Journal, vol. 11(19), pages 1-23, September.
    2. Pasrun Adam & Rosnawintang Rosnawintang & La Ode Saidi & La Tondi & La Ode Arsad Sani, 2018. "The Causal Relationship between Crude Oil Price, Exchange Rate and Rice Price," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 90-94.
    3. Anders, Sven & Fedoseeva, Svetlana, 2017. "Quality, Sourcing, and Asymmetric Exchange-Rate Pass-Through into U.S. Coffee Imports," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(3), September.
    4. Tan Ngoc Vu & Chi Minh Ho & Thang Cong Nguyen & Duc Hong Vo, 2020. "The Determinants of Risk Transmission between Oil and Agricultural Prices: An IPVAR Approach," Agriculture, MDPI, Open Access Journal, vol. 10(4), pages 1-14, April.

    More about this item

    Keywords

    Agricultural and Food Policy; International Relations/Trade;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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