Date of Graduation

5-2020

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Luckstead, Jeff

Committee Member

Nalley, Lawton L.

Second Committee Member

Durand-Morat, Alvaro

Keywords

asymmetric exchange rates; rice trade; Southeast Asia; rice importing; milled rice; price elasticity; NARDL model; ARDL model

Abstract

Asian countries consume approximately 90% of the world’s rice supply. Between 2007 and 2014, Thailand, Vietnam, and India accounted for 60% of the world’s exports of rice. This paper estimates the impact of exchange rate fluctuations on bilateral trade flows in Southeast Asia. Because most Southeast Asian countries have state trading enterprises or agencies controlling rice trade, this analysis will provide insight as to whether these agencies respond to exchange rate fluctuations in a manner consistent with economic theory. Behavior inconsistent with economic theory could provide evidence of stabilizing domestic prices, market power, or export expansion policies. The analysis focuses on the main Asian importers, by volume, of rice (Malaysia, Indonesia, and China) from one of the largest, by volume, Asian rice exporters (Thailand). Another novel aspect of this analysis is the model employed. A nonlinear autoregressive distributed lag econometric model is utilized. The dependent variable is the bilateral importing LCU real value. The independent variables include lagged dependent variables, exchange rates, and real GDP per capita of the importing country. Results show countries’ state trading enterprises are not optimizing import decisions as purchasing power fluctuates, which is the opposite of exchange rate theory.

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