IMPACTS OF EXCHANGE RATE DEVALUATIONS ON THE COFFEE PRODUCTION RELATIONS
Adriano Marcos Rodrigues Figueiredo, Adriana Vieira Ferreira, Erly Cardoso Teixeira
Abstract
The objective of this paper is to determine the changes deriving from exchange devaluation shocks in coffee product and factors markets. Substitutability among factors is examined by applying the dual properties of the trans log cost function. Coffee grains data were obtained in the area ofVi9osa/MG between September/1988 and May/1998. Two scenarios of exchange devaluation are examined and the results show increases in factors' demand, specially land. The increase in the demand of imported input would be equivalent to the applied shock. Coffee production rises 26.14% with a 30% exchange devaluation, and 43 .57% with a 50% shock. This increase would determine a larger pressure in the use of land, changing the estimated cost shares.
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References
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