A GENERALIZED SUPPLY RESPONSE/FACTOR DEMAND MODEL AND ITS APPLICATION TO THE FEEDER CATTLE MARKET

The appropriate specification of expectations in empirical models of supply response or factor demand is discussed. A general model that admits both extrapolative and rational expectations is formulated and analyzed. The model is used to investigate the decision making process of cattle feeders by i...

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Bibliographic Details
Published inWestern Journal of Agricultural Economics Vol. 10; no. 2
Main Authors Shonkwiler, John Scott, Hinckley, Suzanne
Format Journal Article
LanguageEnglish
Published Western Agricultural Economics Association 1985
SeriesWestern Journal of Agricultural Economics
Subjects
Demand and Price Analysis
Industries
Livestock Production
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Summary:The appropriate specification of expectations in empirical models of supply response or factor demand is discussed. A general model that admits both extrapolative and rational expectations is formulated and analyzed. The model is used to investigate the decision making process of cattle feeders by incorporating information on futures prices (as representations of rational forecasts) and lagged prices. The findings provide some evidence that cattle feeders form their expectations of future prices using both types of information.