The U.S. Agricultural Sector and the Macroeconomy

Abstract

The effects of the exchange rate, the U.S. agricultural price, the domestic income, and the interest rate on the U.S. net farm income are investigated in a cointegration framework. For this purpose, the Phillips-Hansen fully-modified cointegration (FM-OLS) procedure is applied to annual data for the period 1957–2008. Results suggest that there exists the long-run equilibrium relationship between the U.S. net farm income and the selected macroeconomic variables. We also find that the exchange rate and U.S. agricultural price are more important than other variables in determining the U.S. net farm income.agricultural price, exchange rate, gross domestic product, interest rate, net farm income, Phillips-Hansen fully-modified cointegration technique, Agribusiness, Agricultural Finance, Land Economics/Use, Production Economics, Research Methods/ Statistical Methods, C22, E23, Q11,