Exchange Rate Sensitivity of Fresh Tomatoes Imports from Mexico to the United States
The agri-food trade between Mexico and the United States grew substantially after the implementation of NAFTA in 1994. While some analysts argue that NAFTA has contributed the most to the dramatic expansion of this trade, others have emphasized the role played by the exchange rate in this process. An attempt is made in this paper to address this issue by quantifying the effects of NAFTA, the Mexico-US exchange rate changes and its volatility on the fresh tomato imports into the United States from Mexico using the maximum likelihood cointegration analysis. The results from the cointegration analysis show that while changes in exchange rate have a positive effect on trade flows, volatility of the exchange rate has a significant negative effect on trade flows. The results from the error-correction model show that both NAFTA and the exchange rate have significant positive influence on fresh tomato imports in the United States from Mexico. However, the effects of exchange rate changes outweigh the effects of NAFTA in the short-run
|Date of creation:||2009|
|Date of revision:|
|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.:
- Malaga, Jaime E. & Williams, Gary W. & Fuller, Stephen W., 2001. "US-Mexico fresh vegetable trade: the effects of trade liberalization and economic growth," Agricultural Economics, Blackwell, vol. 26(1), pages 45-55, October.
- Malaga, Jaime E. & Williams, Gary W. & Fuller, Stephen W., 2001. "US-Mexico fresh vegetable trade: the effects of trade liberalization and economic growth," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 26(1), October.
- Padilla-Bernal, Luz E. & Thilmany, Dawn D., 2003. "Price Relationships Among North American Fresh Tomato Markets: A Comparison Between Mexican And U.S. Markets," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 5(03).
- Bollerslev, Tim, 1986.
"Generalized autoregressive conditional heteroskedasticity,"
Journal of Econometrics,
Elsevier, vol. 31(3), pages 307-327, April.
- Tim Bollerslev, 1986. "Generalized autoregressive conditional heteroskedasticity," EERI Research Paper Series EERI RP 1986/01, Economics and Econometrics Research Institute (EERI), Brussels.
- Belanger, D. & Gutierrez, S. & Racette, D. & Raynauld, J., 1990.
"The Impact Of Exchange Rate Variability On Trade Flows: Further Results On Sectoral U.S. Imports From Canada,"
90-08, ECOLE DES HAUTES ETUDES COMMERCIALES (H.E.C.), MONTREAL-.
- Belanger, Denis & Gutierrez, Sylvia & Racette, Daniel & Raynauld, Jacques, 1992. "The impact of exchange rate variability on trade flows: Further results on sectoral U.S. imports from Canada," The North American Journal of Economics and Finance, Elsevier, vol. 3(1), pages 61-82.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- Konno, Toru & Fukushige, Mototsugu, 2003. "Did NAFTA cause the structural changes in bilateral import functions between the US and Mexico?," Journal of Policy Modeling, Elsevier, vol. 25(1), pages 53-59, January.
- Qian, Ying & Varangis, Panos, 1994. "Does Exchange Rate Volatility Hinder Export Growth?," Empirical Economics, Springer, vol. 19(3), pages 371-96.
- Jeffrey H. Dorfman & William D. Lastrapes, 1996. "The Dynamic Responses of Crop and Livestock Prices to Money-Supply Shocks: A Bayesian Analysis Using Long-Run Identifying Restrictions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 530-541.
- Guedae Cho & Ian M. Sheldon & Steve McCorriston, 2002. "Exchange Rate Uncertainty and Agricultural Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 931-942.
- anonymous, 1986. "Review of monetary policy and conditions," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 49, december.
- Thursby, Jerry G & Thursby, Marie C, 1984. "How Reliable Are Simple, Single Equation Specifications of Import Demand?," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 120-28, February.
- Elie Appelbaum & Ulrich Kohli, 1997.
"Import Price Uncertainty And The Distribution Of Income,"
The Review of Economics and Statistics,
MIT Press, vol. 79(4), pages 620-630, November.
- Elie Appelbaum, 1996. "Import Price Uncertainty and the Distribution of Income," Working Papers 1996_10, York University, Department of Economics.
- Kirstin Hubrich & Helmut Lutkepohl & Pentti Saikkonen, 2001.
"A Review Of Systems Cointegration Tests,"
Taylor & Francis Journals, vol. 20(3), pages 247-318.
- Robert Engle, 2001. "GARCH 101: The Use of ARCH/GARCH Models in Applied Econometrics," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 157-168, Fall.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Asseery, A. & Peel, D. A., 1991. "The effects of exchange rate volatility on exports : Some new estimates," Economics Letters, Elsevier, vol. 37(2), pages 173-177, October.
- Stephen W. Fuller & Nicolas Gutierrez & Oral Capps, 1992. "International dry onion trade: Factors affecting import demands for US dry onions," Agribusiness, John Wiley & Sons, Ltd., vol. 8(5), pages 445-455.
- Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
- Kenen, Peter B & Rodrik, Dani, 1986. "Measuring and Analyzing the Effects of Short-term Volatility in Real Exchange Rates," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 311-15, May.
- McKenzie, Michael D, 1999. " The Impact of Exchange Rate Volatility on International Trade Flows," Journal of Economic Surveys, Wiley Blackwell, vol. 13(1), pages 71-106, February.
- Hong Liang, 1998. "Real Exchange Rate Volatility; Does the Nominal Exchange Rate Regime Matter?," IMF Working Papers 98/147, International Monetary Fund.
- Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
- Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
- Bollerslev, Tim & Chou, Ray Y. & Kroner, Kenneth F., 1992. "ARCH modeling in finance : A review of the theory and empirical evidence," Journal of Econometrics, Elsevier, vol. 52(1-2), pages 5-59.
- Carone, Giuseppe, 1996. "Modeling the U.S. demand for imports through cointegration and error correction," Journal of Policy Modeling, Elsevier, vol. 18(1), pages 1-48, February.
- Alper Guzel, H. & Kulshreshtha, Surendra N., 1995. "Effects of real exchange rate changes on Canadian agriculture: A general equilibrium evaluation," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 639-657, December.
- Hafer, R W & Sheehan, Richard G, 1991. "Policy Inference Using VAR Models," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 44-52, January.
When requesting a correction, please mention this item's handle: RePEc:ags:iaae09:51459. 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.