Exchange Rates, Foreign Income, and U. S. Agricultural Exports

Abstract

While it is generally accepted that change in the real value of the dollar is an important determinant of exports, it has not been rigorously demonstrated that this relationship, derivable from theory, holds empirically for agricultural exports and the components of agricultural exports. Starting with a dynamic maximizing framework, this paper estimates the real tradeweighted exchange rate and trade partner income effects on U.S. agricultural exports. For the period 1970-2006, a one percent annual increase in trade partners' income is found to increase total agricultural exports by about 0.75 percent, while a one percent appreciation of the dollar relative to trade partner trade-weighted currencies decreases total agricultural exports by about 0.5 percent. While these effects carry over to 12 commodity subcategories, they are conditioned by differences between bulk and high value commodities, and differences in the export demand from high compared to low income countries. We use a directed acyclic graphs (DAG) technique to identify the inverted fork causal relationships from vector autoregression (VAR) models. We also find that there is an asymmetric exchange rate effect so that the negative effect of exchange rate appreciation on exports sometimes dominates the positive effect of foreign income growth.

Why export competitiveness differs within Indian textile industry? Determinants and empirical evidence

“…Studies carried out by Caglayan and Demir (2013) and Hooy et al (2015) indicated the positive influence of REER on the exports. However, other researchers found the negative impact of REER on exports (Kemal and Qadir, 2005; Shane et al , 2008; and Cheung and Sengupta, 2013). Some of the previous studies concluded that there was no impact of REER on exports in the long duration (Fang and Miller, 2007; and Nyeadi et al , 2014).…”

“…However, such as ER, consensus on the impact of REER on EC is missing in the literature. Previous research studies examining the impact of REER on EC in different nations are carried out by Dhiman (2020), Sukar (1998), Kemal and Qadir (2005), Fountas and Aristotelous (2005), Fang and Miller (2007), Marquez and Schindler (2007), Shane et al (2008), Dincer and Kandil (2011), Caglayan and Demir (2013), Cheung and Sengupta (2013), Sweidan (2013) and Hooy et al (2015). However, there is no agreement found in these studies.…”

“…No doubt EC is an important factor for a country to survive in the global arena. Considering its importance scholars in this field have continued discussion in the literature (Athukorala, 1991; Athukorala and Menon, 1994; House et al , 2002; Shane et al , 2008; Mougoue and Aggarwal, 2011; Caglayan and Demir, 2013; Hooy et al , 2015; Dhiman and Sharma, 2017a, 2017b; Caporale et al , 2018). In this debate, EC has been examined for several emerging economies such as Czech Republic, Hungary, Indonesia, Korea, Mexico, Poland, South Africa, Thailand and Turkey; ASEAN countries and also for other countries such as Ghana, USA, Singapore and Japan.…”

The nexus of agricultural exports and performance in Malaysia: a dynamic panel data approach

“…There are large numbers of studies which have explored the relations between factors and agricultural performance (Shane et al, 2008;Dimitri, 2010;Sheng and Chancellor, 2019;Rada et al, 2019;Yu et al, 2019;Key, 2019). One example is the relationship between macroeconomic variables and the performance of agricultural firms; the nexus of firm performance with macroeconomic variables is studied widely from different aspects.…”

A Demand for Cuban Tobacco Exports

“…Their findings show that the elasticities not only vary in magnitude among the countries, but also differ considerably from aggregate elasticity values estimated in other studies suggesting that policies should be adapted to each trading partner. For an industrialized country such as the U.S., Shane et al (2008) estimate the real trade-weighted exchange rate and trade partner income effects on U.S. agricultural products. A one percent increase in trade partner's income is found to increase total agricultural exports by about 0.75 percent while a one percent appreciation of the dollar relative to the trade partner trade-weighted currencies decreases total agricultural exports by around 0.5 percent.…”