Farm incomes and the real exchange rate in Australia: evidence from the ORANI model.

Uses a model of the Australian economy to analyse the effects on Australian agriculture of increases in tariffs, wages, oil prices and domestic aggregate demand. Results indicate that an increase in any of these features has adverse implications for the agricultural sector and that the severity of those implications is well indicated by the extent to which the increases cause declines in the real exchange rate. Movements in the real exchange rate are crucial for agriculture because they are closely related to movements in agriculture's price-cost ratio. -from Authors