EXCHANGE RATE EFFECTS ON CANADIAN/U.S. AGRICULTURAL PRICES

Exchange rate effects on prices in Canada and the United States are evaluated for five traded farm outputs (wheat, soybeans, corn, feeder steers, and slaughter steers) and four traded non-farm-produced inputs (fertilizer, pesticides, petroleum, and farm machinery). Unit root tests suggest the series are stationary in first differences. Short-run dynamic models based on the differences specification adopted earlier by Carter, Grey and Furtan (1990) are re-estimated using similar data over an extended period that encompasses recent exchange rate movements. The analysis confirms that short-run adjustments toward the law of one price occur for the five agricultural outputs and to a lesser extent for the three intermediate inputs, while such price adjustment is refuted for farm machinery. Cointegration tests also show price convergence to stationary long-run equilibrium relationships for the five farm outputs but not for the inputs.


Issue Date:
2002
Publication Type:
Conference Paper/ Presentation
Record Identifier:
http://ageconsearch.umn.edu/record/19886
PURL Identifier:
http://purl.umn.edu/19886
Total Pages:
24
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2018-01-22

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