The changing structure of the determinants of cattle prices in the United States : an empirical study

Abstract

This study utilizes a new quarterly data set for the United States cattle markets spanning from 1971-2008 to estimate dynamic price models in three vertically related cattle markets: the models for boxed beef cutouts, slaughter cattle, and feeder cattle. Structural tests are then utilized to test whether the occurrence of Bovine Spongiform Encephalopathy (BSE) in 2003 and the introduction and widespread use of the Atkins diet between 1991 and 2005 lead to structural changes in the determinants of prices in each of the three markets. The results suggest BSE did not cause structural change within any market level, and BSE and Atkins diet events caused structural change within the boxed beef cutout values level. An important contribution of this study is the examination of structural change, suggesting that the market events lead to little or no structural change within the market levels.