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RELATIVE PRICE VARIABILITY AMONG AGRICULTURAL COMMODITIES AND MACROECONOMIC INSTABILITY IN THE UNITED KINGDOM
Author(s) -
Smith V. H.,
Lapp J. S.
Publication year - 1993
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.1477-9552.1993.tb00271.x
Subject(s) - economics , relative price , agriculture , inflation (cosmology) , commodity , consumption (sociology) , agricultural economics , production (economics) , agricultural productivity , common agricultural policy , monetary economics , macroeconomics , international economics , european union , market economy , ecology , social science , physics , sociology , theoretical physics , biology
This paper develops measures of relative price variability among agricultural commodities in the UK farm sector for the period 1956‐88. Econometric tests of the hypothesis that relative price variability is positively correlated with instability in the macroeconomy are carried out. The results indicate that UK agricultural commodity prices become more volatile relative to one another when the economy‐wide inflation rate increases and when aggregate output becomes more variable. These findings suggest that UK producers and consumers of domestically grown farm products experience increased risk and uncertainty in their production and consumption decisions during periods of macroeconomic instability. The effects of UK entry into the European Community are also examined; no evidence is found to suggest that adoption of the Common Agricultural Policy reduced year‐to‐year relative price variability among agricultural commodities.