Short- and long-run effects of macroeconomic variables on the Spanish agricultural sector

Abstract

This paper analyses the effect of some relevant macroeconomic variables on Spanish agricultural prices and exports. The approach used is based on the cointegration procedure, making the distinction between short- and long-run effects possible. An eight-variable system in real terms is specified. Long-run analysis indicates that both money income neutrality and agricultural price homogeneity hold. Short-run dynamics has been analysed by specifying a structural vector error correction model. The main results indicate that, in general terms, agricultural variables do not significantly affect macroeconomic variables. In the very short run, farmers will benefit from increases in money and general prices, whereas over longer horizons the agricultural terms of trade will become worse. Copyright 2000, Oxford University Press.