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THE IMPACT OF INFLATION ON PRICES RECEIVED AND PAID BY GREEK FARMERS
Author(s) -
Daouli J.,
Demoussis M. P.
Publication year - 1989
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1989.tb01102.x
Subject(s) - inflation (cosmology) , economics , neutrality , flexibility (engineering) , monetary economics , government (linguistics) , philosophy , linguistics , physics , management , epistemology , theoretical physics
This paper investigates empirically the impact of inflation on the terms of trade, prices received and paid, for Greek farmers in the period 1967–87. According to conventional theory, inflation can have a non‐neutral effect if it is unanticipated and if prices received and paid by farmers exhibit different degrees of flexibility. However, in the case where prices are administered, inflation neutrality depends on government's policy objectives and ability to adjust prices of inputs and outputs to the rate of inflation. The empirical investigation undertaken in this study shows that pricing policies implemented by the Greek government have resulted in neutralising the impact of inflation on the terms of trade for Greek farmers. Furthermore, the observed significant variability of the terms of trade can be attributed solely to real demand and supply factors.