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On The Economic Rationality Of Market Participants: The Case Of Expectations In The U.S. Pork Market

  • Chavas, Jean-Paul

This study investigates the nature of price expectations in a competitive market. The approach is illustrated in an application to the U.S. pork market, which exhibits cyclical patterns and biological production lags. Pork price equations are estimated under different expectation regimes. The empirical results suggest the presence of heterogeneous price expectations among market participants. A large proportion of the market (73%) is found to be associated with backward-looking expectations, where future prices are anticipated on the basis of their observed historical patterns.

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File URL: http://purl.umn.edu/30882
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Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 24 (1999)
Issue (Month): 01 (July)
Pages:

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Handle: RePEc:ags:jlaare:30882
Contact details of provider: Web page: http://waeaonline.org/

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  1. Foster, Kenneth A & Burt, Oscar R, 1992. "A Dynamic Model of Investment in the U.S. Beef-Cattle Industry," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(4), pages 419-26, October.
  2. Rosen, Sherwin & Murphy, Kevin M & Scheinkman, Jose A, 1994. "Cattle Cycles," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 468-92, June.
  3. Eckstein, Zvi, 1984. "A Rational Expectations Model of Agricultural Supply," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 1-19, February.
  4. Holt, Matthew & Johnson, Stanley R., 1989. "Bounded Price Variation and Rational Expectations in an Endogenous Switching Model of the U.S. Corn Market," Staff General Research Papers Archive 267, Iowa State University, Department of Economics.
  5. Shonkwiler, John Scott & Spreen, Thomas H., 1986. "Statistical Significance And Stability Of The Hog Cycle," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 18(02), December.
  6. Miranowski, John & Orazem, Peter, 1986. "An Indirect Test for the Specification of Expectation Regimes," Staff General Research Papers Archive 10702, Iowa State University, Department of Economics.
  7. Nerlove, Marc & Fornari, Ilaria, 1998. "Quasi-rational expectations, an alternative to fully rational expectations: An application to US beef cattle supply," Journal of Econometrics, Elsevier, vol. 83(1-2), pages 129-161.
  8. William A. Brock & Cars H. Hommes, 1995. "Rational Routes to Randomness," Working Papers 95-03-029, Santa Fe Institute.
  9. Hayes, Dermot J. & Schmitz, Andrew, 1987. "Hog Cycles and Countercyclical Production Response," Staff General Research Papers Archive 597, Iowa State University, Department of Economics.
  10. Chow, G.C., 1988. "Rational Versus Adaptive Expectations In Present Value Models," Papers 328, Princeton, Department of Economics - Econometric Research Program.
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