The Long-run Impact of Different Exchange Rates on the Projected Agricultural Income of an Export Dependent Region of the UK
This paper evaluates the effects of different exchange rate scenarios on projections for agricultural incomes and prices in a small highly export dependent region, NI. The modelling system used in the analysis is designed to capture the complexities of the relationship between exchange rates and agricultural prices and incomes. The system models not only the main agricultural sectors in NI but also the demand for and supply of agricultural commodities in the EU and beyond. This is important, given that NI is a price taker and the EU is the main export destination for its agricultural production. The analysis serves to underline the importance of exchange rates for the NI agricultural economy. When the euro is weak against sterling then agricultural sector incomes are substantially lower than when the euro is strong against sterling. Approximately, a one per cent weakening/strengthening of the euro against sterling is projected to reduce/increase aggregate net receipts in the dairy, beef and sheep sectors by one per cent. This means that exchange rate movements, which are outside the control of the agricultural community, have a dramatic affect on agricultural incomes in NI. This conclusion should be considered against the backdrop of a 28% drop (approx.) in the value of the euro against the pound that has occurred since 1995. The impact of exchange rate movements on producer prices appears to be less pronounced.
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.:
- Rudiger Dornbusch, 1985.
"Exchange Rates and Prices,"
NBER Working Papers
1769, National Bureau of Economic Research, Inc.
- Sadorsky, Perry, 2000. "The empirical relationship between energy futures prices and exchange rates," Energy Economics, Elsevier, vol. 22(2), pages 253-266, April.
- 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.
- Gross, Dominique M. & Schmitt, Nicolas, 2000.
"Exchange rate pass-through and dynamic oligopoly: an empirical investigation,"
Journal of International Economics,
Elsevier, vol. 52(1), pages 89-112, October.
- Dominique M. Gross & Nicolas Schmitt, 1999. "Exchange Rate Pass-Through and Dynamic Oligopoly; An Empirical Investigation," IMF Working Papers 99/47, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpot:0409003. 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: (EconWPA)
If references are entirely missing, you can add them using this form.