Recommended Citation
Postprint version. Published in American Journal of Agricultural Economics, Volume 82, Issue 1, February 1, 2000, pages 82-96. Copyright © 2000 Agricultural and Applied Economics Association. Published by Blackwell. The definitive version is available at http://dx.doi.org/10.1111/0002-9092.00008.
NOTE: At the time of publication, the author Stephen Hamilton was not yet affiliated with Cal Poly.
Abstract
Recent evidence suggests that cyclical cattle inventories are driven by exogenous shocks. This article examines a second possible contributing factor to the cattle cycle: a market timing effect that arises from individual attempts to maintain countercyclical inventories. The model uncovers an important conceptual point: to the extent that cycles are driven by exogenous shocks, a representative producer should outperform one who maintains a constant inventory; whereas, for cycles induced by market timing, a representative producer should underperform one with a constant inventory. Simulated net returns over 1974–98 reveal that a constant-inventory manager significantly outperformed the representative U.S. producer, which indicates that market timing influences the cattle cycle.
Disciplines
Economics
URL: http://digitalcommons.calpoly.edu/econ_fac/17