MACRO-MONETARY, EFFECTS ON AGRICULTURAL PRICES - THE CASE OF GREEK AGRICULTURE

The macroeconomic effects on agricultural prices in the Greek economy and, in particular, differences in prices paid and received by farmers (cost-price squeeze) are examined employing integration and cointegra tion analysis. A Johansen cointegration test between prices paid and p rices received by farmers supports the presence of cost-price squeeze, since non-cointegration between the two price indices cannot be rejec ted. In other words, prices paid by farmers respond more than prices r eceived by farmers during inflationary periods and hence affect their parity ratio. Multivariate cointegration tests indicated that forces o utside agriculture can explain the non-cointegration between farm inpu t and output prices. These forces are monetary macro variables through the country's macroeconomic policy, such as money supply, the general price level ant the domestic product.