Exchange rates and multicommodity international trade: insights from spatial price equilibrium modeling with policy instruments via variational inequalities

Anna Nagurney (), Dana Hassani, Oleg Nivievskyi () and Pavlo Martyshev
Additional contact information
Anna Nagurney: University of Massachusetts
Dana Hassani: University of Massachusetts
Pavlo Martyshev: Kyiv School of Economics

Journal of Global Optimization, 2023, vol. 87, issue 1, No 1, 30 pages

Abstract: Abstract In this paper, we construct a multicommodity international trade spatial price equilibrium model of special relevance to agriculture in which exchange rates are included along with policy instruments in the form of tariffs, subsidies as well as quotas. The model allows for multiple trade routes between country origin nodes and country destination nodes and these trade routes can include different modes of transportation and transport through distinct countries. We capture the impacts of exchange rates through the definition of effective path costs and identify the governing multicommodity international trade spatial price equilibrium conditions, which are then formulated as a variational inequality problem in product path flows. Existence results are established and a computational procedure presented. The illustrative numerical examples and a case study are inspired by the impacts of the war against Ukraine on agricultural trade flows and product prices. The modeling and algorithmic framework allows for the quantification of the impacts of exchange rates and various trade policies, as well as the addition or deletion of supply markets, demand markets and/or routes, on supply and demand market prices in local currencies, and on the volume of product trade flows with implications for food security.

Keywords: Exchange rates; Spatial price equilibrium; International trade; Networks; Variational inequalities; Agriculture (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s10898-023-01292-x Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jglopt:v:87:y:2023:i:1:d:10.1007_s10898-023-01292-x

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/10898

DOI: 10.1007/s10898-023-01292-x

Access Statistics for this article

Journal of Global Optimization is currently edited by Sergiy Butenko

More articles in Journal of Global Optimization from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().