The Relationship between Monetary Policies and Farmers’ Welfare to Reduce Poverty in Iran

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Abstract

    Purchasing power of earned income and family consumption expenses, are among the main drivers of farmers’ welfare. One can predict any improvement in well-being of agricultural producers based on their purchasing power enhancement which, in turn, is related to domestic terms of trade index (DTOT). Present study aims at analyzing the relationship between monetary policies and farmers' welfare using vector autoregressive model for the period from 1981 to 2012.The Johansen test results confirm that DTOT index is directly and significantly affected by sector growth, inflation, interest and real exchange rates in the long term. Furthermore, the estimated error correction model recognizes a dynamic two-period lagged relationship among aforementioned variables in the short term. Reconsideration of agricultural support policies in order to neutralize the possible adverse impacts of macroeconomic variables’ changes is recommended.

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References

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Agricultural Economics Research
Volume 8, Issue 32 - Serial Number 32
January 2017
Pages 101-126

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History

  • Receive Date: 04 September 2016
  • Revise Date: 28 January 2017
  • Accept Date: 14 December 2016

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