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Does Market Timing Contribute to the Cattle Cycle?

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  • Stephen F. Hamilton
  • Terry L. Kastens

Abstract

Recent evidence suggests that cyclical cattle inventories are driven by exogenous shocks. This article examines a second possible contributing factor to the cattle cycle: a market timing effect that arises from individual attempts to maintain countercyclical inventories. The model uncovers an important conceptual point: to the extent that cycles are driven by exogenous shocks, a representative producer should outperform one who maintains a constant inventory; whereas, for cycles induced by market timing, a representative producer should underperform one with a constant inventory. Simulated net returns over 1974−98 reveal that a constant-inventory manager significantly outperformed the representative U.S. producer, which indicates that market timing influences the cattle cycle. Copyright 2000, Oxford University Press.

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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 82 (2000)
Issue (Month): 1 ()
Pages: 82-96

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Handle: RePEc:oup:ajagec:v:82:y:2000:i:1:p:82-96

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Cited by:
  1. David Aadland, 2002. "Cattle Cycles, Heterogeneous Expectations and the Age Distribution of Capital," Others 0211002, EconWPA.
  2. Mimako Kobayashi & Kimberly Rollins, 2009. "Invasive Weeds, Wildfire, and Rancher Decision Making in the Great Basin," Working Papers 09-004, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics.
  3. Stockton, Matthew C. & Van Tassell, Larry W., 2007. "The Cattle Price Cycle: An Exploration in Simulation," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37564, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  4. Dorfman, Jeffrey H. & Park, Myung D., 2009. "Looking for Cattle and Hog Cycles through a Bayesian Window," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49278, Agricultural and Applied Economics Association.
  5. Fanning, Jasper & Marsh, Thomas L. & Jones, Rodney D., 2001. "Commercial Beef Herd Replacement Strategies," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36064, Western Agricultural Economics Association.

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