(DP 1991-16) Multi-Market Effects of Exchange Rate Adjustment on Agriculture: The Case of the Philippines

Abstract

This paper presents an analysis of the impact of a devaluation of the Philippine agricultural markets using a multi-market model. The modeling technique is described and distinguished from partial and general equilibrium methods of analysis. The simulation results show that agricultural markets respond to a devaluation depending on their trade orientation and their linkages with each other. It is also shown that rural real incomes improve with a devaluation because of the income generation effects of price changes and rising export earnings. A more favorable result is obtained when devaluation is accompanied by a fertilizer subsidy.