Economic Dynamics of the German Hog-Price Cycle

We investigated the economic dynamics of the German hog-price cycle with an innovative ‘diagnostic’ modeling approach. Hog-price cycles are conventionally modeled stochastically—most recently as randomly-shifting sinusoidal oscillations. Alternatively, we applied Nonlinear Time Series analysis to empirically reconstruct a deterministic, low-dimensional, and nonlinear attractor from observed hog prices. We next formulated a structural (explanatory) model of the pork industry to synthesize the empirical hog-price attractor. Model simulations demonstrate that low price-elasticity of demand contributes to aperiodic price cycling – a well know result – and further reveal two other important driving factors: investment irreversibility (caused by high specificity of technology), and liquidity-driven investment behavior of German farmers.


Editor(s):
Schiefer, Gerhard
Rickert, Ursula
Issue Date:
2015-07
Publication Type:
Journal Article
DOI and Other Identifiers:
ISSN 2194-511X (Other)
PURL Identifier:
http://purl.umn.edu/208872
Published in:
International Journal on Food System Dynamics, Volume 06, Number 2
Page range:
64-80
Total Pages:
17




 Record created 2017-04-01, last modified 2017-08-28

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