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The impact of world price instability on agricultural supply according to several macroeconomic factors

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  • Julie SUBERVIE

Abstract

This paper aims at analyzing the effect of world price instability on the aggregate agricultural supply of developing countries and determining to what extent this effect depends on the macroeconomic environment. Producers of agricultural commodity-exporting countries are particularly vulnerable to the fluctuations of world prices : they are exposed to price shocks and their ability to cope with them is weak. But the effectiveness of risk coping strategies is conditional on the influence of macroeconomic factors. We test the impact of international price instability on the aggregate agricultural supply, taking account of some features of the national environment (infrastructure, inflation, and financial deepening). The analysis is based on a sample of 25 countries during the period 1961-2002. Results from panel data highlight a significant negative effect of international price instability on aggregate agricultural supply. Moreover, they show that high inflation, weak infrastructure and poorly developed financial system contribute to reinforce this effect.

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  • Julie SUBERVIE, 2006. "The impact of world price instability on agricultural supply according to several macroeconomic factors," Working Papers 200604, CERDI.
  • Handle: RePEc:cdi:wpaper:802
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    Cited by:

    1. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 828-854.
    2. Patrick Guillaumont, 2009. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 193-228.
    3. Patrick GUILLAUMONT, 2007. "EVI and its Use. Design of an Economic Vulnerability Index and its Use for International Development Policy," Working Papers 200714, CERDI.

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