Determinants of export supply of coffee in Nicaragua

Abstract

Coffee cultivation is fundamental for the Nicaraguan economy, due to its generation of profits through international trade and being the productive base of thousands of small and medium producers; in 2015 coffee represented 15.6% of total exports in the country. This study performs a log-linear econometric model of multiple regression with distributed lags on the exportable supply of coffee in the period 1994-2015 and is supported by authors such as Moguillansky (1995); Mántey (2013); Amaya & Lanuza (2014); Aviles, et al. (2020). The methodology used is quantitative, correlational and includes variables such as exchange rate policy, trade policy and productive capacity (yield and Gross Domestic Product GDP). The data were extracted from the Central Bank of Nicaragua BCN and the econometric software Gretl was used for the estimations. The results show a significant model (p=0.00) with statistically significant independent variables that fit 89.5%. It was found that trade liberalization lagged by two years has a positive marginal effect of 0.9% on the exportable supply of coffee in the country, that is, trade agreements tend to have effects two years after their signing; with respect to the exchange rate policy, the parameter turned out to be lower with 0.012% with a lag period, it complies with the expected sign which explains that depreciating the national currency influences the increase of exports in volumes the following year but with low results. GDP and yields promote slight increases in exportable supply.