Research On The Domestic And International Transmissionmechanism Of Agro-products’ Price And Trade Relations

Agriculture as a primary industry is the lifeblood of the national economy, playing a foundational role in China’s economic development, and to ensure the stability of agricultural markets is an imperative requirement for the sustainable development of agriculture and food security. Fluctuation and transmission in agro-product price is not only related to the development of agriculture,distribution of various stages’ benefits in the whole agricultural chain,also affects the stability of the socio-economic order. In recent years, the severe shock of agro-products’ prices in China’s agricultural market has aroused the awareness of the public and the government. This paper studies the domestic mechanism of agro-products’ price transmission. It contributes to the stability of the agro-products’ market. It helps to alleviate abnormal fluctuations. Also, it helps to guarantee the social stability and economic development. Meanwhile, China’s comprehensive national strength and international status have been constantly upgrading, China’s role in the international agricultural market has become increasingly important, and the share of China’s import and export trade of agricultural products has been continually increasing. The impact of international agricultural prices on domestic agricultural prices via the behavior of import should not be ignored, so the study on international mechanism of agro-products’ price transmission should be in depth study.The development of a country’s foreign trade contributes to optimize resource allocation, achieve economic scale, improve labor productivity, and promote industrial upgrading. Agricultural trade is an important part of a country’s foreign trade, China’s total import and export trade of agricultural products is rising and its international status in the international markets is improving, the impact of the instability of international agricultural price on the domestic price causes severe concerns. Therefore, to explore the mechanism of price fluctuations which has an indispensable effect on China’s import and export trade, is theoretically and realistically significant for strengthening the negotiating powers of the international agricultural markets, increasing the international status and discourse right, improving the conditions of agricultural trade, and strengthen domestic agricultural reserve.Based on quantitative analysis on the agro-products’ prices fluctuating on different paths in the domestic and foreign agricultural market, the price transmission mechanism of agricultural products can be recognized. And it constructs import and export model of agricultural products combining Cobb- Douglas production function theory. With the introduction of the RMB real effective exchange rates, it investigates the impact of agricultural prices on import and export trade. The main contents of this paper are:1.Analyze related links of agro-products in China’s agricultural industry chain, and verify the price transmission time and path in the agricultural industry chain, the use vector autoregressive model and variance decomposition to get the transmission time, direction and influence of agro-product price.2.Based on four paths theory of price transmission, verify the price transmission mechanism and path of agro-products in the international market, then get transmission time and strength in the four different path.3. Based on Cobb- Douglas production function theory, build import and export models, and measure the impact of agricultural price fluctuations on China’s import and export trade, then verify the impact of price fluctuations on agricultural products import and export volume of China’s agricultural products.