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A General Equilibrium Analysis of Foreign and Domestic Demand Shocks Arising from Mad Cow Disease in the United States

Author

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  • Devadoss, Stephen
  • Holland, David W.
  • Stodick, Leroy
  • Ghosh, Joydeep

Abstract

The discovery of the first case of mad cow disease in the United States in 2003 reverberated across the beef and cattle industry. This study employs a general equilibrium model to analyze the potential economic effects of mad cow disease on the beef, cattle, and other meat industries under three scenarios, ranging form most favorable to most pessimistic. The scenario with 90% foreign demand decline and 10% domestic demand reduction generates results consistent with the actual outcomes after the mad cow disease outbreak. Only if domestic demand declines significantly will the economic hardship in the U.S. beef and cattle industry be very large.

Suggested Citation

  • Devadoss, Stephen & Holland, David W. & Stodick, Leroy & Ghosh, Joydeep, 2006. "A General Equilibrium Analysis of Foreign and Domestic Demand Shocks Arising from Mad Cow Disease in the United States," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(02), August.
  • Handle: RePEc:ags:jlaare:8607
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    References listed on IDEAS

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    3. Roland Herrmann & Stanley R. Thompson & Stephanie Krischik-Bautz, 2002. "Bovine spongiform encephalopathy and generic promotion of beef: An analysis for “quality from Bavaria”," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 369-385.
    4. Kapuscinski, Cezary A. & Warr, Peter G., 1999. "Estimation of Armington elasticities: an application to the Philippines," Economic Modelling, Elsevier, vol. 16(2), pages 257-278, April.
    5. John Gilbert & Thomas Wahl, 2002. "Applied General Equilibrium Assessments of Trade Libereralisation in China," The World Economy, Wiley Blackwell, vol. 25(5), pages 697-731, May.
    6. Latouche, K. & Rainelli, P. & Vermersch, D., 1998. "Food safety issues and the BSE scare: some lessons from the French case," Food Policy, Elsevier, vol. 23(5), pages 347-356, October.
    7. Scott McDonald & Deborah Roberts, 1998. "The Economy-Wide Effects of the BSE Crisis: A CGE Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 458-471.
    8. John Gilbert, 2003. "Trade Liberalization and Employment in Developing Economies of the Americas," Economie Internationale, CEPII research center, issue 94-95, pages 155-174.
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    Citations

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    Cited by:

    1. Christine Wieck & David Holland, 2010. "The economic effect of the Canadian BSE outbreak on the US economy," Applied Economics, Taylor & Francis Journals, vol. 42(8), pages 935-946.
    2. Valentina G. Bruno & Bahattin Büyükşahin & Michel A. Robe, 2017. "The Financialization of Food?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 243-264.
    3. David Holland, 2010. "What happens when exports expand: some ideas for closure of regional computable general equilibrium models," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(2), pages 439-451, October.
    4. Wang, Zun & Sage, Jeremy & Goodchild, Anne & Jessup, Eric & Casavant, Kenneth & Knutson, Rachel L., 2013. "A Framework for Determining Highway Truck-Freight Benefits and Economic Impacts," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 52(2).
    5. repec:oup:revage:v:30:y:2008:i:1:p:136-150. is not listed on IDEAS
    6. Arnaud Rault & Stéphane Krebs, 2011. "Catastrophic risk and risk management, what do we know about livestock epidemics? State of the art and prospects," Working Papers SMART - LERECO 11-05, INRA UMR SMART-LERECO.
    7. Rault, Arnaud & Krebs, Stephane, 2011. "Livestock epidemics and catastrophic risk management: State of the art and prospects on economic dynamics," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114793, European Association of Agricultural Economists.
    8. Thomsen, Michael R. & McKenzie, Andrew M. & Power, Gabriel J., 2009. "Volatility Surface and Skewness in Live Cattle Futures Price Distributions with Application to North American BSE Announcements," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49354, Agricultural and Applied Economics Association.

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