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Abstract

Using a sample consisting of bilateral trade flows across 10 developed countries between 1974 and 1995, this paper explores the effect of exchange rate misalignment on the growth of agricultural trade as compared to other sectors. Controlling for other factors likely to determine the growth in bilateral agricultural trade, the results show that long-run real exchange rate variability has had a significant negative effect on the growth of agricultural trade over this period. Keywords: Exchange rates, misalignment, agricultural trade

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