This research focused on the time adjustment paths of the exchange rate and prices in response to unanticipated monetary shocks. Johansen’s cointegration test along with a vector error correction model was employed, to investigate whether agricultural prices overshoot in a transition economy. The empirical results indicate that agricultural prices adjust faster than industrial prices to innovations in the money supply, affecting relative prices in the short run, but strict long-run money neutrality does not hold.
Key words: Agricultural prices, monetary shocks, overshooting.
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