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Exchange Rates, Foreign Income, and U.S. Agriculture

  • Shane, Mathew
  • Roe, Terry L.
  • Somwaru, Agapi

This paper focuses on estimating the effects of trade partner income and real trade-weighted exchange rates on US agricultural exports. For the period 1970-2003, a one percent annual increase in trade partners’ income is found to increase total agricultural exports by about 1.6 percent while a one percent appreciation of the dollar relative to trade partner trade-weighted currencies decreases total agricultural exports by about 0.8 percent. We find these effects also carry over to 12 commodity subcategories, although the effects are conditioned by differences between bulk and high value commodities, and differences in the export demand from high compared to low income countries. We also find that the negative effect of exchange rate appreciation on exports often dominates the positive effect from income growth.

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Paper provided by University of Minnesota, Center for International Food and Agricultural Policy in its series Conference Papers with number 6686.

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Date of creation: Aug 2006
Date of revision:
Handle: RePEc:ags:umcicp:6686
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  1. Keblowski, Piotr & Welfe, Aleksander, 2004. "The ADF-KPSS test of the joint confirmation hypothesis of unit autoregressive root," Economics Letters, Elsevier, vol. 85(2), pages 257-263, November.
  2. Obstfeld, Maurice, 2002. "Exchange Rates and Adjustment: Perspectives from the New Open Economy Macroeconomics," Center for International and Development Economics Research, Working Paper Series qt5t38s42v, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  3. Babula, Ronald A. & Bessler, David A. & Payne, Warren S., 2004. "Dynamic Relationships Among U.S. Wheat-Related Markets: Applying Directed Acyclic Graphs to a Time Series Model," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(01), April.
  4. Diao, Xinshen & Roe, Terry L. & Somwaru, Agapi, 1999. "What Is The Cause Of Growth In Regional Trade: Trade Liberalization Or Rta'S? The Case Of Agriculture," Working Papers 14605, International Agricultural Trade Research Consortium.
  5. Chari, V V & Kehoe, Patrick J & McGrattan, Ellen R, 2002. "Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?," Review of Economic Studies, Wiley Blackwell, vol. 69(3), pages 533-63, July.
  6. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
  7. Rose, Andrew K., 1990. "Exchange rates and the trade balance : Some evidence from developing countries," Economics Letters, Elsevier, vol. 34(3), pages 271-275, November.
  8. Orden, David, 1986. "Agriculture, trade, and macroeconomics: The U.S. case," Journal of Policy Modeling, Elsevier, vol. 8(1), pages 27-51.
  9. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
  10. repec:jaa:jagape:v:36:y:2004:i:1:p:1-22 is not listed on IDEAS
  11. Ostry, Jonathan D. & Rose, Andrew K., 1992. "An empirical evaluation of the macroeconomic effects of tarrifs," Journal of International Money and Finance, Elsevier, vol. 11(1), pages 63-79, February.
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