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Cattle Cycles

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  • Sherwin Rosen
  • Kevin M. Murphy
  • Jose A. Scheinkman

Abstract

U.S. beef cattle stocks are among the most periodic time-series in economics. A theory of cattle cycles is constructed, based upon rational breeding stock inventory decisions in the presence of gestation and maturation delays between production and consumption. The low fertility rates of cows and substantial lags between fertility and consumption decisions cause the demographic structure of the herd to respond cyclically to exogenous shocks in demand for beef and in production costs. Known biotechnology of cattle demographics imply sharp numerical benchmarks for the dynamic system that describes the evolution of cattle stock and beef consumption. These compare very closely to structural econometric time-series estimates over the 1875-1990 period and prove that systematic cattle cycles have a wholly rational explanation.

Suggested Citation

  • Sherwin Rosen & Kevin M. Murphy & Jose A. Scheinkman, 1993. "Cattle Cycles," NBER Working Papers 4403, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4403
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    References listed on IDEAS

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    1. Randal R. Rucker & Oscar R. Burt & Jeffrey T. LaFrance, 1984. "An Econometric Model of Cattle Inventories," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(2), pages 131-144.
    2. Nerlove, Marc & Grether, David M. & Carvalho, José L., 1979. "Analysis of Economic Time Series," Elsevier Monographs, Elsevier, edition 1, number 9780125157506 edited by Shell, Karl.
    3. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, Oxford University Press, vol. 52(2), pages 255-280.
    4. Glen D. Whipple & Dale J. Menkhaus, 1989. "Supply Response in the U.S. Sheep Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 126-135.
    5. James N. Trapp, 1986. "Investment and Disinvestment Principles with Nonconstant Prices and Varying Firm Size Applied to Beef-Breeding Herds," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 691-703.
    6. 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 419-426, October.
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