The Impact of Exchange Rate Misalignment on Wheat’s Producer Support Estimates

Document Type : Research Article

Authors

• S.S. Hosseini ¹
• O. Gilanpour ²
• S. Iravani ¹

¹ Department of Agricultural Economic, Collage of Agriculture Economic and Development, Tehran University

² Agriculture Economics Agricultural Planning Economics & Rural Development Research Institute (APERDRI)

10.22067/jead2.v1389i3.7737

Abstract

Abstract
Main objective of this paper is to investigate the impact of exchange rate misalignment on wheat’s producer estimates (PSE), using the 1989-2007 period’s data. For this purpose, Vector Error Correction Model (VECM) along with the use of real exchange rate based on purchasing power party (PPP) was applied to estimate nominal equilibrium exchange rates. Then, by using market price support percentage (MPS%) and producer support estimate percentage (PSE%) measures, impact of exchange rates misalignment on wheat’s support measures were evaluated. The result of the paper show that specific sector policies had positive impact while, exchange rates polices counteracted specific sector polices. Meanwhile with approaching the exchange rates toward its counterpart of the equilibrium exchange rates, specific – sector polices had a significant effect on MPS% and PSE% of wheat.

Keywords: Exchange rate misalignment, Support measures, Wheat, Real exchange rate, Equilibrium exchange rate

20.1001.1.20084722.1389.24.3.14.1

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