Money and Agriculture: The Dynamics of Money Financial Market-Agricultural Trade Linkages

Abstract

This article investigates empirical relationships among the money supply, the interest rate, the exchange rate, the general price level, and agricultural exports and relative prices using three-and six-variable vector autoregressive models. Shocks to the money supply have little direct effect on agriculture, whereas positive interest rate, exchange rate, and general-price-level shocks have negative effects. The dynamic patterns characterizing monetary interactions with the financial variables do not preclude the possibility that monetary policies underlie the observed, interest rate and exchange rate Impacts, but the observed price-level shocks appear to be Independent ,of the money supply Agricultural exports and prices demonstrate little Impact on the macroeconomic variables.