(Montana State University - Bozeman, College of Agriculture, 2007) Grant, Brenna Beth; Chairperson, Graduate Committee: Gary W. Brester.
The objectives of this study are to econometrically determine if the US and Canadian fed steer, feeder steer, and slaughter cow markets were integrated from 1985 to 2006. The law of one price was tested for individually defined policy regimes. Price transmission and exchange rate pass-through are tested in each regime to determine the degree of market integration for each cattle market. Regimes are tested for changes in market structure to determine if the policy change had been significant. The increase in Canadian slaughter capacity is then quantified on cattle prices in Canada and the US. All cattle markets were integrated from 1985 to 2006. However, while the markets were found to be integrated they are not perfectly integrated because of imperfect price transmission and incomplete exchange rate pass-through. The LOP held pre-CUSTA for all markets, and post-1995 for the fed steer and feeder steer markets.
