Empirically Analyzing the Impacts of U.S. Export Credit Programs on U.S. Agricultural Export Competitiveness

expressed in US dollars. DOM is the domestic production of the importing countries in
metric tons while PVC is the present value of cost savings to the importing country from
export credits. ²⁰

Finallye_i,t is the error term which is assumed to independent and normally distributed.

A similar model was used to estimate the impact of credit programs when the length of
repayment is reduced to 180 days, the only difference being the PVC variable which was
calculated using 180 days as the length of repayment and short term interest rate (less
than a year).

An increase in the price of US relative to the ROW would reduce the demand for
US wheat. On the other hand, an increase in the price of the ROW wheat relative to the
US will increase the demand for US wheat. The variable price ratio is therefore expected
to be negative. An increase in the value of US dollar relative to the importing countries’
currency would increase the price paid for US wheat and thereby reduce the value of
wheat imports from the US. Similarly, a depreciation in the value of the US dollar
relative to the importing countries would make US wheat cheaper and increase the
demand for US wheat. Thus the variable exchange rate (EX) is expected to be negative.

As income of the importing countries increases they are likely to import more
wheat from the US therefore the variable GDP is expected to be positive.

As domestic production of wheat increases in the importing countries’ they are
likely to import less wheat from the US and the variable DOM is expected to be negative.
Finally the variable PVC for additionality is expected to be positive. As importing

See Appendix I for details on calculation of PVC.

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