Doctoral Dissertations

Date of Award

3-1973

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Agricultural Economics

Major Professor

Charles Sappington

Abstract

The principal aim of this study was to develop a simultaneous equation model of the U. S. beef-pork economy. Also, postsample period changes in selected endogenous variables were analyzed. Five theoretical and eleven statistical equations were specified. Using two stage least squares the statistical equations were fitted to monthly data of January 1964 through December 1970. It was found that the most important variables affecting cattle and hog marketings were respective inventory levels. Prices paid by packers for cattle and hogs were strongly influenced by respective wholesale prices. Changes in cold storage of beef and pork were influenced by respective production levels, first of month inventories and prices. Wholesale to retail marketing margins for the two meats responded to changes in retail food store wage rates. Retail demand was inelastic for beef and pork, but appeared to be elastic for broilers. No firm statement could be made about the elasticity of broiler demand, as price was used as the dependent variable. Beef and pork were very weak substitutes at the retail level. Results of the postsample analysis were, for the most part, disappointing. The first stage equations of the model were used to calculate values for endogenous variables from actual data on exogenous variables. It was found that these calculated values were not outstandingly successful in tracking changes in respective actual values. The model did predict levels of all endogenous price variables would rise between February 1971 and February 1972, although in some cases it missed the extent of the rises by a considerable amount. In addition, it was found that published cattle inventories, but not published hog inventories, were useful for tracking postsample data. From a summary table of elasticity estimates from past studies, it would appear that retail demand for beef is becoming more price and income inelastic. For this and other recent studies, the income elasticity for pork was positive, a result which contradicted earlier studies.

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