Credit Constraints, Interest Rates, and Agricultural Prices

Commodity futures prices and economic news: An examination under alternative monetary regimes

“…A decline in the demand for inventories is also a decrease in demand for the commodity, and therefore, in the short run prices fall. The effects of interest rates on spot and futures prices have been examined theoretically by Bond (1984) and Chambers (1984Chambers ( , 1985. Their results concur with the analysis given above.…”

“…Several authors have examined the role of exchange rates on domestic agriculture. Chambers (1984) and Chambers andJust (1981a, 1981b), for example, find a negative relationship between the value of the dollar and agricultural prices and exports.…”

How do commodity futures respond to macroeconomic news?

“…Second, high interest rates make financial assets such as bonds more attractive relative to commodity contracts, and thus encourage investors to shift their portfolios out of commodities into bonds. The negative relation between interest rates and commodity prices is supported theoretically by Bond (1984) and Chambers (1985) and empirically by Frankel (2006).…”

The differential effects of monetary policy on relative expected prices in the agricultural and non-agricultural sectors of Peru

“…with regard to price flexibility, it is important to recall that highly inel as ti c agricultural commodity demand ana supply , slow growth ot food demand , highly competitive markets, rapid technical change , and asset fixi ty are the reasons given to explain why one should expect a fairly high degree of absolute price variability in agriculture compared to steaay or less flexible prices outside of agriculture (Chambers , 1985) . More importantly , when these farm-products have to be traded in the international market , and assuming that toreign exchange rate is fixed, their relative prices also become flexible due to absol ute price variability nature and also because these price fluctuations are explained by the competitiveness t hat both home ana for eign countries look for in an effort to imp rove their trade balance .…”

“…; Gardner (1981); Chambers (1984Chambers ( , 1985; Starleaf et al (1985); Stamoul is et al . (1985); Falk et al .…”