Abstract
The purpose of this note is to show that the prices which Peterson computed for his recent paper also can be viewed as effective exchange rates. Deviations from the world relative price system in agriculture are usually the result of market intervention, taxes, or subsidies. Such distortions, whether they are the result of domestic or of trade policies, can be viewed as distortions in effective exchange rates. For international comparisons, the exchange rate view is, analytically and conceptually, more general and convenient. Peterson's wheat equivalent price, A, for the commodity i, is defined as
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