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Impact of Macroeconomic Policies on Agricultural Prices

Published online by Cambridge University Press:  15 September 2016

Titus O. Awokuse
Titus O. Awokuse*
Affiliation:
Department of Food and Resource Economics, University of Delaware
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Abstract

Existing empirical evidence on the impact of macroeconomic variables on agriculture remains mixed and inconclusive. This paper re-examines the dynamic relationship between monetary policy variables and agricultural prices using alternative vector autoregression (VAR) type model specifications. Directed acyclic graph theory is proposed as an alternative modeling approach to supplement existing modeling methods. Similar to results in other studies, this study's findings show that over the time period analyzed (1975–2000), changes to money supply as a monetary policy tool had little or no impact on agricultural prices. The primary macroeconomic policy instrument that affects agricultural prices is the exchange rate, which is shown to be directly linked to interest rate, a source of monetary policy shock.

Keywords

agricultural pricescointegrationdirected acyclic graphsmonetary policyVAR
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 34 , Issue 2 , October 2005 , pp. 226 - 237
Copyright
Copyright © 2005 Northeastern Agricultural and Resource Economics Association 

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