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Exchange Rates, Trade Deficits, and U.S. Prices


  • S. Devadoss
  • William H. Meyers
  • Stanley R. Johnson


Granger Causality tests are run to examine the causal relationships between the trade deficit, another macroeconomic variable, and U.S. prices. The results show that strong causal relationships run from the trade deficit to agricultural prices but not to nonagricultural prices. Results of causality tests also indicate that the huge trade deficit is caused by a strong U.S. dollar.

Suggested Citation

  • S. Devadoss & William H. Meyers & Stanley R. Johnson, 1986. "Exchange Rates, Trade Deficits, and U.S. Prices," Center for Agricultural and Rural Development (CARD) Publications 86-wp10, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  • Handle: RePEc:ias:cpaper:86-wp10

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    Cited by:

    1. Liu, Zong-Shin, 1989. "Monetary policy, exchange rate, and effects on US wheat trade and domestic market in an imperfect competition framework," ISU General Staff Papers 1989010108000010216, Iowa State University, Department of Economics.

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