exchange rate regimes and agricultural trade
DESCRIPTION
Exchange Rate Regimes and Agricultural Trade. Tola Oyeyemi Emma Phillips Gary Xia. Think about this…. Images: http://www.dw.de/nuclear-waste-shipment-continues-to-spark-determined-protests/a-6201316 http://www.marxist.com/greek-december-short-balance-sheet.htm - PowerPoint PPT PresentationTRANSCRIPT
Exchange Rate Regimes and Agricultural Trade
Tola Oyeyemi
Emma Phillips
Gary Xia
Think about this…
Images:http://www.dw.de/nuclear-waste-shipment-continues-to-spark-determined-protests/a-6201316http://www.marxist.com/greek-december-short-balance-sheet.htmhttp://www.apostropher.com/blog/archives/001542.html
What is the effect of agricultural trade on exchange rate regimes?
Question
Background on Independent Variable
Decline
• Globalization, Industrialization
• <1960 = 30% of all merch trade
• By 2000, <9%
Still a Loud Voice
• Dwight Watson– Thousands in damages– 10 block area shut down in
DC– Federal offices evacuated
• In 2012 alone:– Serbia, India, Paraguay
Anderson, 2010, p. 3009Leonnig, 2003 United Press Int’l, 2012; Prensa Latina, 2012; The Times of India, 2012)Image: http://www.apostropher.com/blog/archives/001542.html.
Background on Dependent Variable
Elwell, 2011; Singer, 2010Image: http://www.voxeu.org/article/empirical-evidence-monetary-policy-trilemma-1970
• Exchange rate regimes:– Float, fix, peg
• The Gold Standard Bretton-Woods Float• Mundell-Fleming Trilemma:
– Free flow $, exΔ rate certainty, policy-making autonomy
– “Flexibility vs. credibility”(Singer, 2010)
Hypotheses
• Pegged Rate
• Pegged Rate
• Floating Rate
They would move towards a…
HypothesesHypothesesHypothesesHypothesesHypothesesHypotheses
1. Share of GDP in the agricultural sector
1. Share of GDP in agricultural exporting
1. Share of GDP in Domestic Agriculture
Hypotheses
If a country has large…
Methods
• Data Sets: Singer & WDI– 1980 to 2008
• Independent Variable Agricultural Economy» Agriculture’s %GDP per capita
» Exports in Agriculture (% of GDP)
» Domestic Agriculture (% of GDP)
• Dependent Variable Exchange Rate Regimes» IMF scale: 1 = fully fixed, 4 = fully floating
More Variables
• Test for Robustness
• Control Variables Lagged Dependent Variable-Remittances-Exports-Reserves-Democracy-Inflation-Manufacturing-A few more…
ResultsTable 5.1: Relationship Between Agricultural Sector and Exchange Rate Regime, 1980-2009 Model 1 Model 2 Model 3 Model 4 Model 5 Agriculture, value added (% of GDP) -0.001 (0.002) Agricultural raw materials exports, (% of GDP) -0.073*** -0.017*** -0.013** -0.010** (0.012) (0.006) (0.005) (0.005)Domestic Agriculture, value added (% of GDP) .007*** 0.003 0.001 0.000 (0.002) (0.003) (0.002) (0.001)Lagged dependent variable 0.856*** 0.874*** 0.875*** (0.017) (0.013) 0.012Remittances/GDP (lagged) -0.008* -0.004 (0.004) (0.003) Exports/GDP (lagged) -0.002** -0.003*** -0.003*** (0.001) (0.001) (0.001)Reserves (in months of imports) -0.012* -0.010* -0.007 (0.007) (0.006) (0.005)Democracy (polity score) 0.007** 0.006** 0.006** 0.003 (0.003) (0.002)Current account balance 0.007* 0.003 (0.004) (0.003) Inflation (lagged) 0.000 (0.000) Manufacturing/GDP 0.001 (0.003) Percent fix (de jure only) -0.003 (0.002) Year -0.002 (0.003) Capital account openness (KAOPEN) -0.002 (0.014) Terms of trade volatility -0.002 (0.003) Constant 2.191*** 2.306*** 4.314 0.463*** 0.426*** (0.040) (0.047) (5.900) (0.064) (0.056)Obs. 2676 1910 945 1314 1525
Note: Regression coefficients; standard errors in parentheses. * p<0.1, ** p<0.05, *** p<0.01
Conclusions
1. Agriculture (%GDP) insignificant
1. Exports consistently negative and significant
1. Last hypothesis unsupported
1. Remittances insignificant when agriculture is accounted for
• Pegged Rate
• Pegged Rate
• Floating Rate
1. Share of GDP in the agricultural sector
1. Share of GDP in agricultural exporting
1. Share of GDP in Domestic Agriculture
Analysis
They would move towards a…If a country has large…
Why are these results important?
• Exchange rates are highly manipulated– What influences exchange rates?
• Many variables to consider
• Well-being of people
Continuing our Work
• Introduction to larger macroeconomic issues
• Looking at international trade as a whole
• More accurate and comprehensive data– Imports, more countries, etc.
Thank You!
Questions?Questions?
Comments?Comments?
Concerns?Concerns?