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The strength of the dollar: An analysis of trade-weighted foreign exchange rate indices with implications for agricultural trade

Author

Listed:
  • David Henneberry

    (Department of Agricultural Economics at Oklahoma State University)

  • Shida Henneberry

    (Department of Agricultural Economics at Oklahoma State University)

  • Luther Tweeten

    (Department of Agricultural Economics at Oklahoma State University)

Abstract

The foreign exchange value of the US dollar has had a major impact on agricultural trade flows in the 1980s. However, measurement and interpretation of the appreciation of the US dollar must be done with caution. In this article, three different methodologies (Paasche, Laspeyres, and Fisher Ideal) are used to calculate a trade weighted foreign exchange rate representing six flows of US export goods (total exports, all nonagricultural exports, all agricultural exports and wheat, corn, and soybeans individually). The indices are calculated for both real and nominal foreign exchange rates. Implications for agricultural trade are suggested by applying these estimates of the dollar appreciation to previously estimated elasticities of US agricultural export demand with respect to the foreign exchange rate.

Suggested Citation

  • David Henneberry & Shida Henneberry & Luther Tweeten, 1987. "The strength of the dollar: An analysis of trade-weighted foreign exchange rate indices with implications for agricultural trade," Agribusiness, John Wiley & Sons, Ltd., vol. 3(2), pages 189-206.
    • Handle: RePEc:wly:agribz:v:3:y:1987:i:2:p:189-206
    DOI: 10.1002/1520-6297(198722)3:2<189::AID-AGR2720030206>3.0.CO;2-J
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    References listed on IDEAS

    as
    1. Schuh, G. Edward, 1984. "United States Agriculture in the World Economy," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 2(1), pages 1-8, February.
    2. Robert G. Chambers & Richard E. Just, 1981. "Effects of Exchange Rate Changes on U.S. Agriculture: A Dynamic Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(1), pages 32-46.
    3. Michael T. Belongia, 1986. "Estimating exchange rate effects on exports: a cautionary note," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 5-16.
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    Cited by:

    1. Riza Radmehr & Shida Rastegari Henneberry, 2020. "Energy Price Policies and Food Prices: Empirical Evidence from Iran," Energies, MDPI, vol. 13(15), pages 1-15, August.

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