Stream N2O concentrations are often correlated with dissolved nitrogen concentrations ; however, variability in this relationship is often observed between sites . In this study, N2O concentrations were not correlated with microbial community composition, but rather, N2O production was likely elevated in streams indirectly due to high rates of denitrification in response to NO3 pollution. We demonstrate that head water stream microbial communities and ecosystem processes, such as microbial carbon and nitrogen transformations, respond to gradients in land use and stream conditions. Regional differences in stream microbial communities and the observed distance-decay relationships are further evidence that stream communities are seeded from the surrounding landscape. Across geographic regions, microbial community composition varied in streams with high urban, agricultural, and forested land use, and changes in microbial diversity and land use correlated with stream community respiration, linking changes in biodiversity to changes in ecosystem function. Our results suggest that certain microbial groups respond to land use similarly across ecosystems, making them potential candidate taxa to be used in the development of a microbial index of stream conditions.There is much debate about the potential effects of phased reductions in governmental intervention in U. S. agriculture. Unfortunately, growing blueberries in pots there is little evidence that this debate has taken into account the linkages of the agricultural sector with the balance of the U. S. and international economies.
The purpose of the analysis presented in this paper is to give a structural interpretation to the macroeconomic linkages-both forward and backward between the agricultural sector and the aggregate economy; to review and criticize the structural exploration of macroeconomic time series concerning the agricultural sector and the aggregate economy, and to draw out the implications of alternative macroeconomic shocks on the phased reduction of governmental intervention in agriculture. The substantial variation in exchange rates, inflation rates, relative farm prices, and agricultural incomes since the early 1970s has induced a new stream of research on the relationships between macroeconomic policy and the agricultural sector [. In all of these studies, the exchange rate has been recognized as an important determinant of real farm prices through its effects on the trade balance . A series of theoretical and empirical studies on the effect of exchange rates has shown, for instance, the importance of an overvalued currency on U. S. agriculture production and exports . Studies on relative prices and aggregate inflation have supported the hypothesis that the variability in real farm income and prices increases with the general price level variability . At the core of this research is the idea that, if an unanticipated exogenous shock occurs, all the price and interest rate adjustments will happen in some sectors earlier than in others. Assuming prices adjust more quickly in competitive markets than in imperfectly competitive markets, farm prices can be expected to rise faster than non-farm prices, provided of course that agricultural markets are indeed more competitive. Various explanations for these relative price movements have included differences in the supply and demand elasticities of specific products and, more recently, the effects of contract length on the speed of adjustment .
According to Bordo, a change in money supply causes a faster response for farm commodity prices than industrial prices and a faster response for non-durable than durable prices. The existence of nominal influences on real variables in agricultural markets has been tested in a numerous studies . In a more general setting, Fischer has studied three sets of hypotheses linking aggregate price changes to relative price variability: the adjustment cost hypothesis, the rational expectation unanticipated disturbance hypothesis, and the asymmetric price response hypothesis. The first two hypotheses imply that relative price variability is affected by macroeconomic disturbances; the third hypothesis implies that autonomous relative disturbances have macroeconomic effects. Under the first two hypotheses, both price level changes and relative price variability are caused by the same aggregate supply and demand interactions. The third hypothesis is based on the assumption that prices respond asymmetrically to disturbance, for instance, they may be downward inflexible. Under this hypothesis, as Fischer notes , “If the disturbances that move relative prices were primarily supply side, resources should be moving out of the industries where prices have risen towards the industries where prices have yet to fall. If the disturbance were demand side, resources should be moving towards the higher prices sectors.” Hence, differential responses in prices in this case are due to more than price stickiness alone. In Fischer’s empirical work, the available evidence is not totally supportive of the first two hypotheses and the third hypothesis could not be rejected. A number of other studies address the broader macroeconomic scenario. In some cases, this broader perspective includes an examination of the linkages with agricultural commodity prices .
Stemming from Dornbusch’s overshooting models of exchange rate determination, these studies attempt to capture the linkages among exchange rates, money, interest rates, and commodity prices. This work begins with the fixed/flex price specification , modelling the farm sector as a set of auction markets while the non-farm sector is characterized by gradual adjustment of prices. In this framework, agricultural market dynamics is studied, taking into account not only the real demand and supply forces directly related to the farm sector but also the effects of monetary and fiscal policies. The results show that monetary and fiscal policies can have substantial effects on prices and income in the agricultural sector over the short run, whereas sector-specific policies appear to have more significant influences in the long run. Regardless, both sets of policies can have dramatic effects on the dynamic path of the agricultural sector. Unfortunately, the “state of the art” in examining macroeconomic linkages and the role of monetary, fiscal, and commodity-specific policies on the performance of the U. S. agricultural sector is still unsatisfactory. This is, in large part, because not all linkages have been either conceptually or empirically investigated. In particular, the fix/flex specification neglects the structure of commodity-specific policies which limit the downward movement in many agricultural prices. Moreover, the major emphasis in this work has been on what can be referred to as the forward linkages, i.e., those effects that run from the aggregate economy to the agricultural sector. The backward linkages have been almost completely neglected. As noted above, one of the purposes of our analysis is to identify and analyze the backward linkages in conjunction with the forward linkages. Although Gardner might have been correct when he stated, “A fully specified model is not necessary to identify macroeconomic effects upon agriculture; because agriculture is a small part of the general economy ,” there are many other reasons why agriculture could have significant feedback effects on the monetary side of the economy. In particular, a sufficiently large subsidization program for some commodities can have a significant effect on governmental budgets and, thus, fiscal policy. A priori, the fiscal policy effect can in turn influence monetary policy, especially if the monetary authorities’ reaction function is not completely exogenous. With the above motivation as background,drainage gutter we first turn to a theoretical framework that formally incorporates the major features of agricultural policy in the dynamics of commodity, exchange rate, interest rate, money, and manufacturing good markets. This provides the basis for the specification of a vector error correction model with exogenous variables which is empirically estimated in section 3. Based on tests of specific hypotheses regarding identifying restriction as well as forward and backward linkage relationships, a policy simulation model is constructed. This policy simulation model is used to investigate different rates of reduction in governmental subsidization of commodity markets in the face of alternative macroeconomic shocks. From these policy simulation results, a number of concluding remarks and insights are offered in section 6.
The theoretical structural model developed here is a two-sector model in which a number of interactions between the money and foreign exchange markets and the goods market are potentially present. These interactions are both direct and indirect and operate through several different channels. In the analysis, the entire set of interactions are admitted-both direct and indirect and among money, exchange rate, and prices-in a full comprehensive model incorporating all the relevant exogenous variables. The major theoretical features of the model can be’summarized as follows. Manufacturing output is demand determined, while farm output is partly demand detennined and pardy supply detennined where the supply conditions depend on the degree of intervention of the government in agriculture. Prices adjust slowly to changes in money. A balance-of-payment equation detennines the rate of accumulation of reserves as a fraction of the total money stock. Since capital mobility is imperfect, either the capital account or the current account balances can be nonzero in the short run. The monetary authority intervenes on the foreign exchange market in order to keep the rate of depreciation of the exchange rate in line with the domestic trend of monetary growth. Total money supply growth is given by the rate of credit creation and the rate of accumulation of reserves . Price inflation in the two sectors depends on excess demand pressures and on the money growth rate. In the long run, price inflation is equal in the two sectors and is equal to the rate of monetary growth. This is equal to the target rate of credit creation, as well as to the rate of exchange depreciation. Price inflation and output growth in the two sectors, money growth, and the exchange depreciation rate are the endogenous variables. The money stock, the price levels in the two sectors, and the exchange rate level, as well as interest rates, foreign prices , total farm stocks, and government expenditure in agriculture, are exogenously given. Changes in the exchange rate have a direct effect on prices since they imply changes in relative prices. They also have indirect effects, through the foreign exchange intervention rule, since the latter implies a change in domestic supply; a consequent change in income; and, thus, a pressure on prices. Changes in money also have an effect on prices , since they induce changes in domestic demand. Thus, money is non-neutral in the short run. Changes in money supply have an indirect effect also through the change in interest rates, the change in the capital account balance, the consequent pressures on the exchange rate, and therefore on relative prices. Finally, changes in money also have depreciating effects on the exchange rate through the non sterilized foreign exchange intervention.An exogenous supply shock to the entire economy which has stagflation effects, induces changes in the terms of trade and results in changes in the trade balance; in domestic output; and, hence, in money demand. An accommodating monetary policy and a “leaning against the wind” foreign exchange policy will let the changes in prices be fully reflected in changes in money and exchange rates. Sectoral changes in prices, due to autonomous supply shifts, also have effects on money and exchange rates through the trade balance and domestic demand. Within the two-sector model, we incorporate the effects of government farm support programs on the dynamics of agricultural prices in response to changes in monetary and exchange rate policy. The effect of the target price is such that, if the government fully “protects” agriculture, then all downward changes in relative prices are paid back to domestic producers. Thus, changes in market prices are dampened; and the supply reduction measure helps producers adjust to exogenous falls in demand and to alleviate excessive stock accumulation. Reducing excess supply thus has dampening effects on inflation variability. In the limit, if the agricultural output is kept at the market-clearing level, price inflation in the farm sector is equal to general trend inflation. The two policy variables can be proxied by two variables whose actual effect turns out to be even more composite-total farm stocks and government expenditure in agriculture. With no intervention policy in agriculture, following an exogenous reduction in the foreign price of agricultural products we would have a shift of internal demand from domestic to foreign goods, a trade balance deficit, and thus depreciating pressure on the exchange rate. The monetary authority would then intervene on the foreign exchange market by contracting the supply of domestic money in the world market according to the intervention rule.