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The Consequences of a Strong Depreciation of the U.S. Dollar on Agricultural Markets

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  • Charlebois, Pierre
  • Hamann, Nathalie

Abstract

World prices for basic food commodities increased significantly in 2007-2008, triggering a worldwide food crisis. Among all the factors that contributed to the rise in agricultural prices in 2008, the depreciation of the U.S. dollar relative to other major currencies cannot be overlooked. The currencies of the major players in agricultural markets have shown strong appreciation from 2002 to 2008. The purpose of this study is to determine the effect of a strong depreciation of the U.S. dollar on the world prices of food commodities. Given the current U.S. budget situation, future depreciation is possible. This would again have consequences on world commodity prices and on the competitiveness of different countries. Thus, the final section assesses what would happen if a comparable depreciation in the U.S. dollar occurred in the near future.

Suggested Citation

  • Charlebois, Pierre & Hamann, Nathalie, 2010. "The Consequences of a Strong Depreciation of the U.S. Dollar on Agricultural Markets," Economic and Market Information 94750, Agriculture and Agri-Food Canada.
  • Handle: RePEc:ags:aaacem:94750
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    File URL: http://purl.umn.edu/94750
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    References listed on IDEAS

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    1. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, March.
    2. George C. Davis & Maria Cristina Espinoza, 1998. "A Unified Approach to Sensitivity Analysis in Equilibrium Displacement Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 868-879.
    3. John E. Floyd, 1965. "The Effects of Farm Price Supports on the Returns to Land and Labor in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 73, pages 148-148.
    4. William Griffiths & Xueyan Zhao, 2000. "A Unified Approach to Sensitivity Analysis in Equilibrium Displacement Models: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, pages 236-240.
    5. Thomas W. Hertel, 1989. "PSEs and the Mix of Measures to Support Farm Incomes," The World Economy, Wiley Blackwell, vol. 12(1), pages 17-28, March.
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    More about this item

    Keywords

    depreciation; exchange rate; U.S. dollar; Currencies; AGLINK; world prices; competitiveness; agricultural markets; Demand and Price Analysis; International Relations/Trade; Political Economy;

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