The effects of exchange rate policy on the agricultural sector of a small open economy: the case of Jamaica
1997
Lyttle, V.A. (West Indies Univ., St. Augustine (Trinidad and Tobago). Dept. of Agricultural Economics and Farm Management)
Examines the effects of exchange rate policy on the agricultural sector of Jamaica over the period 1970-1990. The research and analysis involved the construction of an econometric model of the sector that recognised specific linkages of relative prices, income and monetary variables. The model was subjected to the analysis of the impact of exchange rate policies on agricultural factor costs, food prices, export competitiveness, profitability and supply, demand for and consumption of domestically produced food, and the demand for and consumption of imported food. Domestic inflation rates and labour productivity were the main determinants of wage rates in the agricultural sector; farmgate prices were the major determinants of domestic retail prices, while the level of wages and exchange rate were the two main variables influencing farmgate prices; domestic retail prices increased faster than wages indicating a decline in the purchasing power of wage earners. Devaluation was found to improve export competitiveness and increase the profitability of exporting for all commodity groups. This did not result in increased export supply of agricultural commodities because of structural constraints in the sector.
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