Journal or Book Title
Public Policy in Food and Agriculture
Azzeddine M. Azzam
Place of Publication
First Page or Article ID Number
This paper analyzes the impact of real exchange rate movements on the composition of trade in value-added and intermediate goods. It is shown that following a depreciation of the exporting country’s currency, the cost of importing value-added products declines relative to the cost of adding value to imported intermediate inputs. In equilibrium the composition of the resulting trade vector depends upon the relative magnitudes of price changes and import demand elasticities. Via simulation, the theoretical results are applied to U.S. trade in meat and feed grains. The papers conclusions have relevance for the development of integrated exchange rate, trade, and industrialization policies.
Encyclopedia of Life Support Systems (EOLSS)
Fuller, Frank and Hayes, Dermot J., "Exchange Rate Impacts on the Composition of Agricultural Trade" (2011). Economics Publications. 570.