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The Effects Of Real Exchange Rate Depreciation On Stochastic Producer Prices In Low Income Agriculture

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  • Barrett, Christopher B.

Abstract

This paper considers the effects of real exchange rate depreciation on stochastic agricultural producer prices in low‐income agriculture. Conventional wisdom, that real depreciation achieved through nominal currency devaluation stimulates tradables production, does not universally hold in the presence of stochastic prices. In fact, real depreciation is only stimulative in two cases–importables that remain importable and nontradables that become exportable. GARCH estimation of time‐series price data on several commodities from Madagascar support the hypotheses generated by the analytical model.
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  • Barrett, Christopher B., 1998. "The Effects Of Real Exchange Rate Depreciation On Stochastic Producer Prices In Low Income Agriculture," Economics Research Institute, ERI Study Papers 28365, Utah State University, Economics Department.
    • Handle: RePEc:ags:usuesp:28365
    DOI: 10.22004/ag.econ.28365
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    2. Andersen, Torben G. & Bollerslev, Tim & Christoffersen, Peter F. & Diebold, Francis X., 2006. "Volatility and Correlation Forecasting," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 1, chapter 15, pages 777-878, Elsevier.
    3. Meyer, Ferdinand H. & Westhoff, Patrick C. & Binfield, Julian C.R. & Kirsten, Johann F., 2006. "Model closure and price formation under switching grain market regimes in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(4), pages 1-12, December.
    4. Torben G. Andersen & Tim Bollerslev & Peter F. Christoffersen & Francis X. Diebold, 2005. "Volatility Forecasting," PIER Working Paper Archive 05-011, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    5. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
    6. Loginova, Daria, 2022. "Assessing the Short-term Effect of Exchange Rate Liberalisation on Food Import Prices: The Regression Discontinuity in Time Employed for Russian Food Markets in 2014," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 3(3), September.
    7. Thomas Knoke & Nick Hanley & Rosa Maria Roman-Cuesta & Ben Groom & Frank Venmans & Carola Paul, 2023. "Trends in tropical forest loss and the social value of emission reductions," Nature Sustainability, Nature, vol. 6(11), pages 1373-1384, November.
    8. Ijambo, Bertha Deshimona, 2017. "An econometric analysis of spatial market integration and price formation in the Namibian sheep industry," Research Theses 334744, Collaborative Masters Program in Agricultural and Applied Economics.

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