Pass-Through in United States Beef Cattle Prices: A Test of Ricardian Rent Theory
Feeder cattle are fattened to become fed live cattle 6 months later, and the feeder cattle stock is fixed in the short-run. Efficiency in competitive markets suggests feeder cattle prices should fully reflect feed prices and information on future fed cattle prices. Employing a long time series (1979â€“2004) of feeder cattle futures, live cattle futures, and local corn prices, we test whether complete pass-through occurs. For fed cattle futures prices, we find about 93% of complete pass-through to present feeder cattle prices. The corresponding negative effect of a corn price increase is about 87% of complete pass-through. In contrast with imperfectly competitive agricultural land rental markets, the results support the hypothesis of Ricardian rent extraction by the scarce asset owner in feeder cattle markets.
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|Date of creation:||15 Apr 2011|
|Publication status:||Published in Empirical Economics, April 2011,, pp. 497-508|
|Contact details of provider:|| Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070|
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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- Jose Manuel Campa & Linda S. Goldberg, 2008.
"Pass-Through of Exchange Rates to Consumption Prices: What Has Changed and Why?,"
NBER Chapters,in: International Financial Issues in the Pacific Rim: Global Imbalances, Financial Liberalization, and Exchange Rate Policy (NBER-EASE Volume 17), pages 139-176
National Bureau of Economic Research, Inc.
- Jose Manuel Campa & Linda S. Goldberg, 2006. "Pass Through of Exchange Rates to Consumption Prices: What has Changed and Why?," NBER Working Papers 12547, National Bureau of Economic Research, Inc.
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