Impacts of Inflation on Agricultural Prices: Panel Smooth Transition Regression Analysis

The purpose of this study is to examine the impact of inflation on agricultural prices. The empirical model developed in that respect was estimated for a panel of twenty eight developed and eighty three developing countries over the period 1980-2007 using panel smooth transition regression technique. The findings indicate that the impact of inflation on the agricultural prices is positive in low inflation regime and is negative in high inflation regime. Therefore, we conclude that the impact of the inflation on the agriculture prices is positive in the developed countries in which low inflation rates are observed and is negative in the developing countries in which high inflation rates are observed.