1. Exchange Rate Regimes and Agricultural Trade
Tola Oyeyemi
Emma Phillips
Gary Xia
NOTE: Will add tractor blockade picture to each slide later…

2. Think about this… Images:

3. What is the effect of agricultural trade on exchange rate regimes?
Question
What is the effect of agricultural trade on exchange rate regimes?

4. Background on Independent Variable
Decline
Still a Loud Voice
Globalization, Industrialization
<1960 = 30% of all merch trade
By 2000, <9%
Dwight Watson
Thousands in damages
10 block area shut down in DC
Federal offices evacuated
In 2012 alone:
Serbia, India, Paraguay
47 hours in pond in national mall, claimed to have explosives, 2003
Anderson, 2010, p. 3009
Leonnig, 2003
United Press Int’l, 2012; Prensa Latina, 2012; The Times of India, 2012)
Image: .

5. Background on Dependent Variable
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)
Elwell, 2011; Singer, 2010
Image:

6. Hypotheses Hypotheses Hypotheses Hypotheses Hypotheses Hypotheses
If a country has large…
They would move towards a…
Share of GDP in the agricultural sector
Share of GDP in agricultural exporting
Share of GDP in Domestic Agriculture
Pegged Rate
Floating Rate

7. 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

8. More Variables Test for Robustness
Control Variables  Lagged Dependent Variable
-Remittances
-Exports
-Reserves
-Democracy
-Inflation
-Manufacturing
-A few more…

9. Results
Table 5.1: Relationship Between Agricultural Sector and Exchange Rate Regime,
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)
Domestic Agriculture, value added (% of GDP)
.007***
0.003
0.001
0.000
(0.003)
(0.001)
Lagged dependent variable
0.856***
0.874***
0.875***
(0.017)
(0.013)
0.012
Remittances/GDP (lagged)
-0.008*
-0.004
(0.004)
Exports/GDP (lagged)
-0.002**
-0.003***
Reserves (in months of imports)
-0.012*
-0.010*
-0.007
(0.007)
Democracy (polity score)
0.007**
0.006**
Current account balance
0.007*
Inflation (lagged)
(0.000)
Manufacturing/GDP
Percent fix (de jure only)
-0.003
Year
-0.002
Capital account openness (KAOPEN)
(0.014)
Terms of trade volatility
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

10. Conclusions Agriculture (%GDP) insignificant
Exports consistently negative and significant
Last hypothesis unsupported
Remittances insignificant when agriculture is accounted for
2nd Bullet: I guess we would discuss exports in this bullet…..

11. Analysis Share of GDP in the agricultural sector Pegged Rate
If a country has large…
They would move towards a…
Share of GDP in the agricultural sector
Share of GDP in agricultural exporting
Share of GDP in Domestic Agriculture
Pegged Rate
Floating Rate

12. Why are these results important?
Exchange rates are highly manipulated
What influences exchange rates?
Many variables to consider
Well-being of people

13. Continuing our Work Introduction to larger macroeconomic issues
Looking at international trade as a whole
More accurate and comprehensive data
Imports, more countries, etc.
Bullet 1: how government makes economic policy decisions.
Bullet 2: Considering other sources of capital flow

14. Thank You!
Questions?
Comments?
Concerns?