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U.S. Money Supply and the Exchange Rate: Long‐Run Effects on the World Feedgrain Market
Author(s) -
Denbaly M.S. Mark,
Williams Gary W.
Publication year - 1988
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1093/aepp/10.1.49
Subject(s) - economics , money supply , monetary economics , exchange rate , linkage (software) , supply and demand , monetary policy , macroeconomics , biochemistry , chemistry , gene
The strength of the linkage between the U.S. money supply and U.S. feedgrain prices and exports over the long run depends on the responsiveness of exchange rates to money supply changes and of feedgrain markets to exchange rate changes. The link between the U.S. money supply and exchange rates is empirically weak. Moreover, U.S. feedgrain prices and exports respond little to exchange rate changes because of a relatively high U.S. export supply price elasticity and a low price responsiveness of highly protected foreign markets. Thus, money supply changes may have only a limited effect on the U.S. feedgrain market.