IDEAS home Printed from https://ideas.repec.org/p/ags/aare01/125552.html
   My bibliography  Save this paper

Impacts of Trade Liberalization on New Zealand’s Agricultural Supply Response: A Counter Factual Analysis

Author

Listed:
  • Cagatay, Selim
  • Lattimore, Ralph G.

Abstract

Beginning in the mid-1980s New Zealand underwent a comprehensive set of economic reforms, which were notable for their breadth and sequencing. The impacts of policy changes on the real exchange rate (RER) and resulting changes in the agricultural sector and related processing industries were the central issues in evaluating the benefits and the costs of the reforms. In this paper, a counter factual analysis was developed to analyze what would have been the supply response of agricultural industries if the sectoral order, sequence and timing of trade liberalization policies had been different from what actually occurred. In addition, the impact of "early" trade liberalization and a deferred capital market liberalization was also examined. Five structural equations explaining the real exchange rate for exportables (RERx), the agricultural capital stock, the supply of primary and processed agriculture and the total demand for exportable industries were estimated using an error correction model. Dynamic simulations were performed which involved three policy scenarious. The results indicated that both the sequence of trade and capital market liberalization and the sectoral sequence and timing of the liberalization policies were important in terms of increasing the agricultural supply response in the post-reform period.

Suggested Citation

  • Cagatay, Selim & Lattimore, Ralph G., 2001. "Impacts of Trade Liberalization on New Zealand’s Agricultural Supply Response: A Counter Factual Analysis," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125552, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare01:125552
    DOI: 10.22004/ag.econ.125552
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/125552/files/Cagatay.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.125552?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jarvis, Lovell S, 1974. "Cattle as Capital Goods and Ranchers as Portfolio Managers: An Application to the Argentine Cattle Sector," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 489-520, May/June.
    2. Corbo, Vittorio & Fischer, Stanley, 1995. "Structural adjustment, stabilization and policy reform: Domestic and international finance," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 44, pages 2845-2924, Elsevier.
    3. Hazledine, Tim, 2000. "Agency Theory Meets Social Capital: The Failure of the 1984-91 New Zealand Economic Revolution," Working Papers 218, Department of Economics, The University of Auckland.
    4. Brunner, Karl & Meltzer, Allan H., 1982. "Economic policy in a world of change," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 17(1), pages 1-6, January.
    5. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    6. F.G. Scrimgeour & E.C. Pasour, 1996. "A Public Choice Perspective on Agricultural Policy Reform: Implications of the New Zealand Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 257-267.
    7. Lewis Evans & Arthur Grimes & Bryce Wilkinson, 1996. "Economic Reform in New Zealand 1984-95: The Pursuit of Efficiency," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1856-1902, December.
    8. A.M.G Coleman & P.F.J Cruse & Rodger Greville & Alfred Y-T Wong & Arthur Grimes & Chris S. Meads, 1989. "Economic notes," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 52, December.
    9. SriRamaratnam, S. & Reynolds, Russell G., 1990. "The New Zealand Pastoral Sector Supply Responses," 1990 Conference (34th), February 13-15, 1990, Brisbane, Australia 145410, Australian Agricultural and Resource Economics Society.
    10. W. E. G. Salter, 1959. "Internal And External Balance: The Role Op Price And Expenditure Effects," The Economic Record, The Economic Society of Australia, vol. 35(71), pages 226-238, August.
    11. T. W.Swan, 1960. "Economic Control In A Dependent Economy," The Economic Record, The Economic Society of Australia, vol. 36(73), pages 51-66, March.
    12. Grant Spencer, 1990. "Monetary policy: the New Zealand experience 1985-1990," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 53, September.
    13. Valdes, Alberto, 1993. "Mix and sequencing of economywide and agricultural reforms: Chile and New Zealand," Agricultural Economics, Blackwell, vol. 8(4), pages 295-311, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cagatay, Selim & Lattimore, Ralph, 2004. "An empirical, small scale 'Traded-Nontraded Goods' model for New Zealand," Economic Modelling, Elsevier, vol. 21(6), pages 991-998, December.
    2. Schiff, Maurice*Valdes, Alberto, 1998. "Agriculture and the macroeconomy," Policy Research Working Paper Series 1967, The World Bank.
    3. Ariel Burstein & Martin Eichenbaum & Sergio Rebelo, 2005. "Large Devaluations and the Real Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 742-784, August.
    4. Soriano, Ma. Cecilia G., 1990. "Classifying the Economy into Traded or Nontraded Sectors," Philippine Journal of Development JPD 1990 Vol. XVII No. 2-, Philippine Institute for Development Studies.
    5. Boris Petkov, 2018. "Natural Resource Abundance: Is it a Blessing or is it a Curse," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(3), pages 25-56, September.
    6. Shashank Goel & V. Raveendra Saradhi, 2015. "Capital Flow Components and the Real Exchange Rate: Implications for India," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 14(2), pages 179-194, December.
    7. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    8. Rodrigo Suescún M., 1997. "Commodity booms,dutch disease,and real business cycles in a small open economy: The case of coffee in Colombia," Borradores de Economia 2164, Banco de la Republica.
    9. Ricardo Hausmann, 1995. "Manejo de sacudidas petroleras negativas: la experiencia venezolana en los años 80," Research Department Publications 4011, Inter-American Development Bank, Research Department.
    10. Matthew T. Holt & Andrew M. McKenzie, 2003. "Quasi-rational and ex ante price expectations in commodity supply models: an empirical analysis of the US broiler market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(4), pages 407-426.
    11. Yin†Wong Cheung & Menzie Chinn & Xin Nong, 2017. "Estimating currency misalignment using the Penn effect: It is not as simple as it looks," International Finance, Wiley Blackwell, vol. 20(3), pages 222-242, December.
    12. Larry A. Sjaastad & Meher Manzur, 2003. "Import Protection, Capital Inflows, and Real Exchange Rate Dynamics," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 177-203, May.
    13. Enrique G. Mendoza & Eugenio Rojas, 2019. "Positive and Normative Implications of Liability Dollarization for Sudden Stops Models of Macroprudential Policy," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(1), pages 174-214, March.
    14. Sylviane Guillaumont Jeanneney, 1988. "Dévaluer en Afrique ?," Revue de l'OFCE, Programme National Persée, vol. 25(1), pages 123-143.
    15. Anna Pavlova & Roberto Rigobon, 2007. "Asset Prices and Exchange Rates," The Review of Financial Studies, Society for Financial Studies, vol. 20(4), pages 1139-1180.
    16. Makin, Anthony J., 2019. "Lessons for macroeconomic policy from the Global Financial Crisis," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 13-25.
    17. Corbo, Vittorio & Fischer, Stanley, 1995. "Structural adjustment, stabilization and policy reform: Domestic and international finance," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 44, pages 2845-2924, Elsevier.
    18. Phillip Edmund Metaxas & Ernst Juerg Weber, 2016. "An Australian Contribution to International Trade Theory: The Dependent Economy Model," The Economic Record, The Economic Society of Australia, vol. 92(298), pages 464-497, September.
    19. Ricardo Hausmann, 1995. "Dealing with Negative Oil Shocks: The Venezuelan Experience in the Eighties," Research Department Publications 4010, Inter-American Development Bank, Research Department.
    20. Buiter, Willem H, 1988. "Structural and Stabilization Aspects of Fiscal and Financial Policy in the Dependent Economy," Oxford Economic Papers, Oxford University Press, vol. 40(2), pages 220-245, June.

    More about this item

    Keywords

    International Relations/Trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aare01:125552. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.