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Causality Between Captive Supplies and Cash Market Prices in the U.S. Cattle Procurement Market

Published online by Cambridge University Press:  15 September 2016

In Bae Ji  and
Chanjin Chung
In Bae Ji
Affiliation:
Department of Agricultural Economics at Oklahoma State University in Stillwater, Oklahoma, and currently a senior researcher at the Korean Rural Economic Institute in Seoul, Korea
Chanjin Chung
Affiliation:
Department of Agricultural Economics at Oklahoma State University in Stillwater
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Abstract

This study tests the causal direction between captive supply and cash market price in the U.S. cattle procurement market. Finding the correct causality should provide useful information to the decades-long debate on packers’ anti-competitive behavior in the U.S. cattle procurement market. It should also help researchers find better econometric specifications for the cash price-captive supply relationship. Two causality tests—the Granger test and the Modified Wald test—were conducted. Overall test results indicate that captive supply causes cash market price, and it favors the price-dependent model.

Keywords

captive supplycattle procurement marketcausalityModified Wald testunit root
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 41 , Issue 3 , December 2012 , pp. 340 - 350
Copyright
Copyright © 2012 Northeastern Agricultural and Resource Economics Association 

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