Exchange Rate Regimes and Agricultural Trade
description
Transcript of Exchange Rate Regimes and Agricultural Trade
Exchange Rate Regimes and Agricultural Trade
Tola Oyeyemi
Emma Phillips
Gary Xia
Think about this…
Images:http://www.dw.de/nuclear-waste-shipment-continues-to-spark-determined-protests/a-6201316http://www.marxist.com/greek-december-short-balance-sheet.htmhttp://www.apostropher.com/blog/archives/001542.html
What is the effect of agricultural trade on exchange rate regimes?
Question
Background on Independent Variable
Decline
• Globalization, Industrialization
• <1960 = 30% of all merch trade
• By 2000, <9%
Still a Loud Voice
• Dwight Watson– Thousands in damages– 10 block area shut down in
DC– Federal offices evacuated
• In 2012 alone:– Serbia, India, Paraguay
Anderson, 2010, p. 3009Leonnig, 2003 United Press Int’l, 2012; Prensa Latina, 2012; The Times of India, 2012)Image: http://www.apostropher.com/blog/archives/001542.html.
Background on Dependent Variable
Elwell, 2011; Singer, 2010Image: http://www.voxeu.org/article/empirical-evidence-monetary-policy-trilemma-1970
• Exchange rate regimes:– Float, fix, peg
• The Gold Standard Bretton-Woods Float• Mundell-Fleming Trilemma:
– Free flow $, exΔ rate certainty, policy-making autonomy
– “Flexibility vs. credibility”(Singer, 2010)
Hypotheses
• Pegged Rate
• Pegged Rate
• Floating Rate
They would move towards a…
HypothesesHypothesesHypothesesHypothesesHypothesesHypotheses
1. Share of GDP in the agricultural sector
1. Share of GDP in agricultural exporting
1. Share of GDP in Domestic Agriculture
Hypotheses
If a country has large…
Methods
• Data Sets: Singer & WDI– 1980 to 2008
• Independent Variable Agricultural Economy» Agriculture’s %GDP per capita
» Exports in Agriculture (% of GDP)
» Domestic Agriculture (% of GDP)
• Dependent Variable Exchange Rate Regimes» IMF scale: 1 = fully fixed, 4 = fully floating
More Variables
• Test for Robustness
• Control Variables Lagged Dependent Variable-Remittances-Exports-Reserves-Democracy-Inflation-Manufacturing-A few more…
ResultsTable 5.1: Relationship Between Agricultural Sector and Exchange Rate Regime, 1980-2009 Model 1 Model 2 Model 3 Model 4 Model 5 Agriculture, value added (% of GDP) -0.001 (0.002) Agricultural raw materials exports, (% of GDP) -0.073*** -0.017*** -0.013** -0.010** (0.012) (0.006) (0.005) (0.005)Domestic Agriculture, value added (% of GDP) .007*** 0.003 0.001 0.000 (0.002) (0.003) (0.002) (0.001)Lagged dependent variable 0.856*** 0.874*** 0.875*** (0.017) (0.013) 0.012Remittances/GDP (lagged) -0.008* -0.004 (0.004) (0.003) Exports/GDP (lagged) -0.002** -0.003*** -0.003*** (0.001) (0.001) (0.001)Reserves (in months of imports) -0.012* -0.010* -0.007 (0.007) (0.006) (0.005)Democracy (polity score) 0.007** 0.006** 0.006** 0.003 (0.003) (0.002)Current account balance 0.007* 0.003 (0.004) (0.003) Inflation (lagged) 0.000 (0.000) Manufacturing/GDP 0.001 (0.003) Percent fix (de jure only) -0.003 (0.002) Year -0.002 (0.003) Capital account openness (KAOPEN) -0.002 (0.014) Terms of trade volatility -0.002 (0.003) Constant 2.191*** 2.306*** 4.314 0.463*** 0.426*** (0.040) (0.047) (5.900) (0.064) (0.056)Obs. 2676 1910 945 1314 1525
Note: Regression coefficients; standard errors in parentheses. * p<0.1, ** p<0.05, *** p<0.01
Conclusions
1. Agriculture (%GDP) insignificant
1. Exports consistently negative and significant
1. Last hypothesis unsupported
1. Remittances insignificant when agriculture is accounted for
• Pegged Rate
• Pegged Rate
• Floating Rate
1. Share of GDP in the agricultural sector
1. Share of GDP in agricultural exporting
1. Share of GDP in Domestic Agriculture
Analysis
They would move towards a…If a country has large…
Why are these results important?
• Exchange rates are highly manipulated– What influences exchange rates?
• Many variables to consider
• Well-being of people
Continuing our Work
• Introduction to larger macroeconomic issues
• Looking at international trade as a whole
• More accurate and comprehensive data– Imports, more countries, etc.
Thank You!
Questions?Questions?
Comments?Comments?
Concerns?Concerns?