Effect of the real exchange rate on the argentine dairy supply

Abstract

This paper analyzes the impact of the real exchange rate (RER) on domestic supply and export of dairy products from Argentina during the period 2000-2012. For this is estimate a series of models that incorporate different measures of RER. The results show that all measures of the RER are statistically significant, with a greater impact on exports than domestic supply. Disaggregating the bilateral RER, we find that the nominal exchange rate and domestic inflation are significant in determining the fate of the deal. It also emphasizes the importance of primary milk production as a determinant of exports.