Decomposing Changes in Agricultural Producer Prices
This paper develops a method for decomposing changes in agricultural producer prices. The method builds on a procedure used by the World Bank, with the key variables in the decomposition being trade prices, exchange rates, and agricultural trade policies. The main ways by which we expand on the World Bank decomposition procedure are by broadening the analysis of policy effects, and by adding the effect from incomplete transmission of changes in border prices and exchange rates to producer prices, and the effect on prices from interactions between variables as they change simultaneously. We demonstrate the decomposition method by using the Russian poultry market in the late 1990s, and find that the dominant factor in changing the producer price was the large depreciation of the ruble. Many developing and transition economies have fluctuating exchange rates. The decomposition method presented in this paper could be used to test the hypothesis that exchange rate movements are the main cause of changes in these countries' agricultural commodity prices. Another hypothesis that the method could help test is that an important factor in affecting countries' agricultural prices is incomplete transmission of changes in trade prices and exchange rates to domestic prices, where the incomplete transmission is mainly caused not by policy, but rather by undeveloped market infrastructure.
|Date of creation:||2006|
|Contact details of provider:|| Web page: http://www.iaae-agecon.org/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Liefert, William M., 2006.
"Decomposing Changes in Agricultural Producer Prices,"
2006 Annual Meeting, August 12-18, 2006, Queensland, Australia
25331, International Association of Agricultural Economists.
- William M. Liefert, 2011. "Decomposing Changes in Agricultural Producer Prices," Journal of Agricultural Economics, Wiley Blackwell, vol. 62(1), pages 119-136, 02.
- Christopher B. Barrett, 2001. "Measuring Integration and Efficiency in International Agricultural Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(1), pages 19-32.
- Alberto Valdes, 1999. "Measures of Agricultural Support Policies in Transition Economies: 1994-1997," American Economic Review, American Economic Association, vol. 89(2), pages 265-270, May.
- Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024 Elsevier.
- Christopher B. Barrett & Jau Rong Li, 2002. "Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 292-307.
- Valdes, A, 1996. "Surveillance of Agricultural Price and Trade Policy in Latin America during Major Policy Reform," World Bank - Discussion Papers 349, World Bank.
- Valdes, A., 2000. "Agricultural Support Policies in Transition Economies," Papers 470, World Bank - Technical Papers.
When requesting a correction, please mention this item's handle: RePEc:ags:iaae06:25331. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.