Foreign Aid, Exchange Rate Regime, and Agricultural Trade

26 Pages Posted: 15 Dec 2022

See all articles by Kyunghun Kim

Kyunghun Kim

Hongik University

Sunghun Lim

Louisiana State University, Department of Agricultural Economics and Agribusiness

Date Written: November 29, 2022

Abstract

This study investigates the relationship between foreign aid and agricultural exports in recipient countries. Using the constructed data from 47 countries in the period of 2001--2018, we first find that foreign aid inflows in the form of official development assistance (ODA) cause an appreciation of the real exchange rate in recipient countries, particularly in low-income countries with floating exchange rate regimes. Our results further uncover that foreign aid inflow unexpectedly leads to a decrease in agricultural exports in agrarian recipient countries through the channel of exchange rate appreciation.

Keywords: Foreign Aid, Official Development Assistance, Exchange Rate, Agricultural Trade, Exports

JEL Classification: B17, F14, F35, O24, P33, Q17

Suggested Citation

Kim, Kyunghun and Lim, Sunghun, Foreign Aid, Exchange Rate Regime, and Agricultural Trade (November 29, 2022). Available at SSRN: https://ssrn.com/abstract=4289067 or http://dx.doi.org/10.2139/ssrn.4289067

Kyunghun Kim

Hongik University ( email )

Seoul

Sunghun Lim (Contact Author)

Louisiana State University, Department of Agricultural Economics and Agribusiness ( email )

273 Martin D. Woodin Hall Louisiana State Universi
Baton Rouge, LA 70803
United States
225-578-2766 (Phone)

HOME PAGE: http://sites.google.com/view/limsunghun

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