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The Impact of Exchange Rate Volatility on World Broiler Trade

Davis, Christopher G., Muhammad, Andrew, Karemera, David, Harvey, David
Agribusiness 2014 v.30 no.1 pp. 46-55
economic factors, marketing, meat, models, trade
Studies of how exchange rate volatility affects aggregate trade flows implicitly assume a uniform response across individual sectors. This is highly unlikely given that the responsiveness of trade to exchange rate fluctuations could depend on the biological, marketing, and economic factors specific to a commodity. Consequently, we focused solely on broilers for this analysis, which is a leading sector in global meat trade. Using a gravity model, we assessed how two measures of exchange rate volatility (short‐ and long‐run) affect cross‐partner broiler trade. Our results indicated that long‐run exchange rate volatility has a negative and significant effect on broiler trade, albeit small when compared to the effects of population, regionalization, and sharing a common border; the short‐run effect of exchange rate volatility was insignificant. Overall, results suggest that exchange rate volatility has little or no effect on bilateral broiler trade. [EconLit citations: C32, F14, Q17].