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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.
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  • Hatzenbuehler, Patrick L. & Abbott, Philip C. & Foster, Kenneth A., 2015. "Agricultural Commodity Prices and Exchange Rates under Structural Change," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204728, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:204728
    DOI: 10.22004/ag.econ.204728
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    2. Ting-Ting Sun & Chi-Wei Su & Ran Tao & Meng Qin, 2021. "Are Agricultural Commodity Prices on a Conventional Wisdom with Inflation?," SAGE Open, , vol. 11(3), pages 21582440211, August.
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    5. Yugay, Stanislav & Götz, Linde & Svanidze, Miranda, 2020. "Exchange Rate Pass-through and Wheat Prices in Russia," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305595, German Association of Agricultural Economists (GEWISOLA).
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    7. Yugay, Stanislav & Götz, Linde & Svanidze, Miranda, 2020. "Exchange Rate Pass-through and Wheat Prices in Russia," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305595, German Association of Agricultural Economists (GEWISOLA).
    8. 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.
    9. Sun, Ting-Ting & Su, Chi-Wei & Mirza, Nawazish & Umar, Muhammad, 2021. "How does trade policy uncertainty affect agriculture commodity prices?," Pacific-Basin Finance Journal, Elsevier, vol. 66(C).
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    More about this item

    Keywords

    Demand and Price Analysis; International Relations/Trade; Marketing;
    All these keywords.

    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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