African Journal of
Agricultural Research

  • Abbreviation: Afr. J. Agric. Res.
  • Language: English
  • ISSN: 1991-637X
  • DOI: 10.5897/AJAR
  • Start Year: 2006
  • Published Articles: 6576

Full Length Research Paper

Monetary impacts and overshooting of agricultural prices in a transition economy: The case of Hungary

Zoltán Bakucs* and Imre FertÅ‘
Institute of Economics, Hungarian Academy of Sciences, 1112 Budapest, Budaörsi út 45, Hungary.
Email: [email protected]

  •  Accepted: 08 October 2012
  •  Published: 20 June 2013

Abstract

This research focused on the time adjustment paths of the exchange rate and prices in response to unanticipated monetary shocks. Johansen’s cointegration test along with a vector error correction model was employed, to investigate whether agricultural prices overshoot in a transition economy. The empirical results indicate that agricultural prices adjust faster than industrial prices to innovations in the money supply, affecting relative prices in the short run, but strict long-run money neutrality does not hold.

 

Key words: Agricultural prices, monetary shocks, overshooting.