Effects of Credit on Agricultural Major Variables in Iran

Authors

• M. Mir Ahmadi
• J. Torkamani

Abstract

The purpose of this study is to examine the effect of credit on major agricultural variables such as agricultural exports, producer gross income, cost of fertilizers and the producers price index using Vector Auto-Regressive model. Balanced and long run relations were examined and the long run coefficient ware calculated. Also, the effects of impulses were analyzed using Impulse Response Function. Variance decomposition criterion was used to determine contribution of each variable to changes of other variables in the model. After confirming the balance and the long run relations, the Vector Error Correction method was used to make a link between the long run balanced relations among variables with short run fluctuation. Data for the period of 1981-2007 were collected from various publications of Central Bank of Iran, PDS economical data base, and International Monetary Fund. Results indicated that, in the long run. Agricultural credit had positive effect on producer price index, agricultural export, and the amount of credit allocated to the agricultural sector for the next period. However, agricultural credit had negative effect on the price of fertilizer in the long run. In addition, in the short run, an increase in agricultural credit had positive influence on the export of agricultural products and producer price index while, it had negative effect on fertilizer price and producer gross income.
 

Keywords

• Agricultural Credit
• Agricultural Export
• Producer Gross Income
• Price of Fertilizer
• Producer Price Index
• VAR Model
• ECM Model

20.1001.1.20086407.1389.2.6.1.3

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