Exchange Rate and Purchasing Power Parity in China Soybean Trading to USA, Argentina, and Brazil, 1999-2010

27 Pages Posted: 4 Dec 2015

See all articles by Zhan Wang

Zhan Wang

Peking University - National School of Development; Peking University - School of Advanced Agricultural Sciences

Thomas R. Harris

University of Nevada, Reno - College of Business Administration - Department of Economics

Xiangzheng Deng

Chinese Academy of Sciences (CAS) - Institute of Geographic Sciences and Natural Resources Research (IGSNRR)

Michael R. Reed

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Jiancheng Chen

Beijing Forestry University

Wentang Zheng

Beijing University

Date Written: December 15, 2011

Abstract

This article researches fluctuation of exchange rate has impacts on China import unit price of soybeans trading to USA, Argentina, and Brazil. Based on yearly and monthly bilateral soybeans trade data from 1999 to 2010, empirical results show that exchange rate is statistically significant to China import soybeans unit price changes in either a long run or a short run. Although dollar value of USA currency depreciation has negative impact on the exporting amount of USA soybeans, the pattern of trade in dollar values did not shift from 1999 to 2010 no matter how international trade organizations influence on trading coordination. Empirical analysis based on monthly USA-China bilateral soybeans trade data from 1999 to 2010 indicates that the volatility of the exchange rate faces a declining trend that may trigger threshold effect on China import unit price changes. Thus, trading large amount of heavy goods to China in a short period can consolidate purchasing power parity of dollar value of USA currency and affect Argentina and Brazil exporting unit price and world price changes even if it faces to a declining trend.

Keywords: China, exchange rate, Purchasing Power Parity (PPP), soybeans, threshold effect

JEL Classification: F12, F31, Q17

Suggested Citation

Wang, Zhan and Harris, Thomas R. and Deng, Xiangzheng and Reed, Michael R. and Chen, Jiancheng and Zheng, Wentang, Exchange Rate and Purchasing Power Parity in China Soybean Trading to USA, Argentina, and Brazil, 1999-2010 (December 15, 2011). Available at SSRN: https://ssrn.com/abstract=2698180 or http://dx.doi.org/10.2139/ssrn.2698180

Zhan Wang (Contact Author)

Peking University - National School of Development ( email )

Beijing, 100871
China

Peking University - School of Advanced Agricultural Sciences ( email )

Beijing, 100871
China

Thomas R. Harris

University of Nevada, Reno - College of Business Administration - Department of Economics

Mail Stop 204
Reno, NV 89557-0105
United States

Xiangzheng Deng

Chinese Academy of Sciences (CAS) - Institute of Geographic Sciences and Natural Resources Research (IGSNRR) ( email )

Beijing
China

Michael R. Reed

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

308 Charles E. Barnhart Bldg.
Lexington, KY 40546-0276
United States
859-257-7259 (Phone)
859-323-1913 (Fax)

Jiancheng Chen

Beijing Forestry University ( email )

35 Qinghua E Rd.
WuDaoKou
Beijing, Haidian Qu 100085
China

Wentang Zheng

Beijing University ( email )

Beijing, 100871
China

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