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Effects of the Monetary Macro-economy on Canadian Agricultural Prices

Author

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  • J. S. Taylor
  • John Spriggs

Abstract

This paper examines the importance of monetary macroeconomic variables on Canadian agricultural prices using vector autoregressive modeling. The research results suggest that U.S. monetary macroeconomic policy, as represented by the U.S./world exchange rate, is the most significant monetary factor influencing Canadian agricultural price instability. The paper also examines how agricultural prices and manufactures prices respond to a monetary shock. The results suggest that agricultural prices respond more quickly in the short run, but that manufactures prices catch up in later periods. This conclusion supports Michael D. Bordo's contract length hypothesis and Jeffrey A. Frankel's overshooting hypothesis. It does not support Luther Tweeten's cost-price squeeze hypothesis.

Suggested Citation

  • J. S. Taylor & John Spriggs, 1989. "Effects of the Monetary Macro-economy on Canadian Agricultural Prices," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 278-289, May.
  • Handle: RePEc:cje:issued:v:22:y:1989:i:2:p:278-89
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    Cited by:

    1. Tai, Meng-Yi & Chao, Chi-Chur & Hu, Shih-Wen & Lai, Ching-Chong & Wang, Vey, 2014. "Monetary policy and price dynamics in a commodity futures market," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 372-379.
    2. Florian Verheyen, 2010. "Monetary Policy, Commodity Prices and Infl ation – Empirical Evidence from the US," Ruhr Economic Papers 0216, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. 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.
    4. Verheyen, Florian, 2010. "Monetary Policy, Commodity Prices and Infl ation – Empirical Evidence from the US," Ruhr Economic Papers 216, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. repec:zbw:rwirep:0216 is not listed on IDEAS
    6. Bakucs, Lajos Zoltan & Ferto, Imre, 2009. "Monetary Impacts and Overshooting of Agricultural Prices in a Transition Economy: The Case of Hungary," 2009 Conference, August 16-22, 2009, Beijing, China 51798, International Association of Agricultural Economists.
    7. Chao, Chi-Chur & Hu, Shih-Wen & Tai, Meng-Yi & Wang, Vey, 2011. "Monetary policy announcements and stock price dynamics in a small open economy," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 520-531, October.
    8. Novak, F.S. & Unterschultz, J.R., 1994. "An Econometric Analysis of the Relationship Between Alberta and United States Livestock Markets," Project Report Series 232383, University of Alberta, Department of Resource Economics and Environmental Sociology.
    9. 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).
    10. Wang, Vey & Lai, Chung-Hui & Hu, Shih-Wen & Cheng, Chia-Hui, 2007. "股票政策宣告對農產品價格與股票價格的動態影響
      [The impact of stock market policy announcement on commodity prices and share prices]
      ," MPRA Paper 31178, University Library of Munich, Germany.

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