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A theoretical and empirical investigation of the supply response in the U.S. beef-cattle industry

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  • David Aadland
  • DeeVon Bailey
  • S. Feng

Abstract

This paper investigates the response of beef cattle producers to changes in the price of cattle. Previous research has suggested that there may be a negative short-run supply response to a permanent increase in the price of cattle. We build a dynamic, rational expectations model that predicts that the supply response is generally positive, even for permanent shocks in the short run, and nests the negative supply response as a special case for appropriately restricted demand shocks. Using annual U.S. time-series data (1930-1997) and a simultaneous-equations econometric approach, we find a positive short-run supply response in the cow market and mixed evidence in the heifer market.

Suggested Citation

  • David Aadland & DeeVon Bailey & S. Feng, "undated". "A theoretical and empirical investigation of the supply response in the U.S. beef-cattle industry," Working Papers 2000-12, Utah State University, Department of Economics.
    • Handle: RePEc:usu:wpaper:2000-12
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    5. 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.
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    1. Ndayitwayeko, W-M. & Odhiambo, M.O. & Nyangweso, P.M. & Korir, M.K., 2012. "Determinants of Beef Meat Supply in Burundi: A Vector Error Correction Model Approach Applied to structural Nerlov Paradign," 2012 Eighth AFMA Congress, November 25-29, 2012, Nairobi, Kenya 159414, African Farm Management Association (AFMA).

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