Exchange Rates, Foreign Income, and U.S. Agriculture

This paper focuses on estimating the effects of trade partner income and real trade-weighted exchange rates on US agricultural exports. For the period 1970-2003, a one percent annual increase in trade partners’ income is found to increase total agricultural exports by about 1.6 percent while a one percent appreciation of the dollar relative to trade partner trade-weighted currencies decreases total agricultural exports by about 0.8 percent. We find these effects also carry over to 12 commodity subcategories, although the effects are conditioned by differences between bulk and high value commodities, and differences in the export demand from high compared to low income countries. We also find that the negative effect of exchange rate appreciation on exports often dominates the positive effect from income growth.

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JEL Codes:
F10; F14; Q17
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Proceedings of the 10th Joint Conference on Agriculture, Food, and the Environment, August 27-30, 2006, Duluth, Minnesota

 Record created 2017-04-01, last modified 2020-10-28

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