Assessing the effect of monetary policy on agricultural growth and food prices
Agricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as India and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This study analysed the...
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| Format: | Article |
| Language: | English |
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Czech Academy of Agricultural Sciences
2018-11-01
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| Series: | Agricultural Economics (AGRICECON) |
| Subjects: | |
| Online Access: | https://agricecon.agriculturejournals.cz/artkey/age-201811-0003_assessing-the-effect-of-monetary-policy-on-agricultural-growth-and-food-prices.php |
| _version_ | 1797899934682316800 |
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| author | Zulfiqar Ali WAGAN Zhang CHEN Hakimzadi SEELRO Muhammad Sanaullah SHAH |
| author_facet | Zulfiqar Ali WAGAN Zhang CHEN Hakimzadi SEELRO Muhammad Sanaullah SHAH |
| author_sort | Zulfiqar Ali WAGAN |
| collection | DOAJ |
| description | Agricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as India and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This study analysed the impact of macroeconomic policy (i.e. monetary policy) on employment, food inflation, and agricultural growth by analysing to what extent monetary policy is effective in controlling food price inflation, the effect of contractionary monetary policy on the agricultural sector's employment and productivity, and the extent of monetary policy transmission to money market rates and 10-year interest rates. We did so by applying a factor-augmented vector autoregressive model proposed by Bernanke et al. (2005) to agricultural data from 1995 and 1996 to 2016 for India and Pakistan, respectively. We found that tight monetary policy significantly reduced food inflation and agricultural production while increasing the rural unemployment rate. Short-term and 10-year interest rates increased owing to the contractionary monetary policies pursued by both countries. An inclusive monetary policy whereby policymakers work alongside governments to achieve price stabilisation and reasonable employment rates is recommended. |
| first_indexed | 2024-04-10T08:37:52Z |
| format | Article |
| id | doaj.art-354e4136b0604775afff33f5284c8d56 |
| institution | Directory Open Access Journal |
| issn | 0139-570X 1805-9295 |
| language | English |
| last_indexed | 2024-04-10T08:37:52Z |
| publishDate | 2018-11-01 |
| publisher | Czech Academy of Agricultural Sciences |
| record_format | Article |
| series | Agricultural Economics (AGRICECON) |
| spelling | doaj.art-354e4136b0604775afff33f5284c8d562023-02-23T03:25:13ZengCzech Academy of Agricultural SciencesAgricultural Economics (AGRICECON)0139-570X1805-92952018-11-01641149950710.17221/295/2017-AGRICECONage-201811-0003Assessing the effect of monetary policy on agricultural growth and food pricesZulfiqar Ali WAGAN0Zhang CHEN1Hakimzadi SEELRO2Muhammad Sanaullah SHAH3School of Management, Hefei University of Technology, Hefei, Anhui, ChinaSchool of Management, Hefei University of Technology, Hefei, Anhui, ChinaFaculty of Social Sciences, Sindh Agriculture University, Tando Jam, Sindh, PakistanSchool of Management, Hefei University of Technology, Hefei, Anhui, ChinaAgricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as India and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This study analysed the impact of macroeconomic policy (i.e. monetary policy) on employment, food inflation, and agricultural growth by analysing to what extent monetary policy is effective in controlling food price inflation, the effect of contractionary monetary policy on the agricultural sector's employment and productivity, and the extent of monetary policy transmission to money market rates and 10-year interest rates. We did so by applying a factor-augmented vector autoregressive model proposed by Bernanke et al. (2005) to agricultural data from 1995 and 1996 to 2016 for India and Pakistan, respectively. We found that tight monetary policy significantly reduced food inflation and agricultural production while increasing the rural unemployment rate. Short-term and 10-year interest rates increased owing to the contractionary monetary policies pursued by both countries. An inclusive monetary policy whereby policymakers work alongside governments to achieve price stabilisation and reasonable employment rates is recommended.https://agricecon.agriculturejournals.cz/artkey/age-201811-0003_assessing-the-effect-of-monetary-policy-on-agricultural-growth-and-food-prices.phpagricultural growthfood inflationmonetary policy |
| spellingShingle | Zulfiqar Ali WAGAN Zhang CHEN Hakimzadi SEELRO Muhammad Sanaullah SHAH Assessing the effect of monetary policy on agricultural growth and food prices Agricultural Economics (AGRICECON) agricultural growth food inflation monetary policy |
| title | Assessing the effect of monetary policy on agricultural growth and food prices |
| title_full | Assessing the effect of monetary policy on agricultural growth and food prices |
| title_fullStr | Assessing the effect of monetary policy on agricultural growth and food prices |
| title_full_unstemmed | Assessing the effect of monetary policy on agricultural growth and food prices |
| title_short | Assessing the effect of monetary policy on agricultural growth and food prices |
| title_sort | assessing the effect of monetary policy on agricultural growth and food prices |
| topic | agricultural growth food inflation monetary policy |
| url | https://agricecon.agriculturejournals.cz/artkey/age-201811-0003_assessing-the-effect-of-monetary-policy-on-agricultural-growth-and-food-prices.php |
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