Monetary shocks and real farm prices

The effect of monetary policy on the farm sector is the subject of much recent research in agricultural economics. Unfortunately, studies attempting to quantify the effects of monetary disturbances on real farm prices report conflicting results: some find that positive monetary shocks increase real farm price in the short run; others detect no such effects. This dissertation offers a resolution to these conflicting findings. Versions of existing models are reestimated using a common data set. When sample periods corresponding to the original studies are used, the conflicting results are confirmed. In contrast, when samples are updated through 1993, all models supply essentially the same result: monetary shocks do not affect real farm price. However, existing empirical models have important shortcomings, To address these, the recently developed "structural" vector autoregression methodology (SVAR) is employed. Once non-monetary macroeconomic factors are accounted for in SVAR models, monetary shocks do not significantly affect real farm price. Moreover, non-monetary macro shocks--aggregate spending and supply shocks--have significant effects on real farm price.