The Effects of Agricultural Trade Openness on Food Price in Iran

Document Type : Research Article-en

Authors

M. Ghahremanzadeh ¹

M. Samadpour ¹

J. Hosseinzad ²

¹ Department of Agricultural Economics, Faculty of Agriculture, University of Tabriz, Tabriz, Iran

² Dep., Agri., University of Tabriz

https://doi.org/10.22067/jead.2022.73620.1098

Abstract

Trade liberalization of agricultural products and its effect on food prices, because of the importance of food in the household consumption basket, is one of the most important goals of governments for public access to health and food security. The present study investigated the effect of trade liberalization on domestic food prices in Iran. In this context, the single-equation error correction model (SEECM) was applied using the required time series data during 1989-2019. The results show that in the short-term, only increases in global food prices, liquidity, and exchange rates significantly affect domestic food prices. However, domestic food prices show more reaction to exchange rate fluctuations than to world prices. The estimated long-run equilibrium relationship demonstrated that world food prices have a positive and trade liberalization has a negative effect on domestic food prices. In addition, in the long run, the effect of liquidity on the domestic food price of food is more than other factors. The estimated error-correction term indicates that in the long run, if a shock occurs to the domestic food price, the domestic market can adjust it by only 35% annually. Considering the fluctuations of global prices and exchange rates, and their impacts on domestic prices, it is necessary to pay attention to these fluctuations in revising trade policies.

Keywords

Exchange rate

Food stuff

Global prices

Trade openness

20.1001.1.20084722.1401.36.4.3.6

Subjects

• Marketing and Trade of Agriculture Production

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©2022 The author(s). This is an open access article distributed under Creative Commons Attribution 4.0 International License (CC BY 4.0)

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