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Overshooting of Agricultural Prices in Four Asian Economies

Published online by Cambridge University Press:  28 April 2015

Sayed H. Saghaian ,
Mohamad F. Hasan  and
Michael R. Reed
Sayed H. Saghaian
Affiliation:
Department of Agricultural Economics at the University of Kentucky, Lexington
Mohamad F. Hasan
Affiliation:
Department of Agricultural Economics at the University of Kentucky, Lexington
Michael R. Reed
Affiliation:
Department of Agricultural Economics at the University of Kentucky, Lexington
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Abstract

This article examines the impacts of monetary policy on agricultural prices in four Asian economies using time series analysis and graph theory. The estimations clearly show that agricultural prices overshoot their long-run equilibrium values for Korea, Philippines, and Thailand, and the overshooting for agricultural prices is larger than for manufactured prices. Impulse-response functions and variance-decomposition analysis based on directed graphs and causal structures highlight the complex interplay among the variables in the model and how those relationships differ by country. Money supply changes clearly affect real variables and relative prices for all countries either through overshooting or non-neutrality of money.

Keywords

agricultural pricesAsian economiesdirected graphsimpulse-response functionsmanufacturing pricesmonetary policyovershootingvariance-decompositions
Type
Original Articles
Information
Journal of Agricultural and Applied Economics , Volume 34 , Issue 1 , April 2002 , pp. 95 - 109
Copyright
Copyright © Southern Agricultural Economics Association 2002

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