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How integrated are world beef markets? The case of Australian and U.S. beef markets
Author(s) -
Diakosavvas Dimitris
Publication year - 1995
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.1995.tb00349.x
Subject(s) - economics , beef cattle , estimation , convergence (economics) , market integration , econometrics , kalman filter , empirical research , agricultural economics , microeconomics , macroeconomics , zoology , mathematics , statistics , biology , management
The objective of the paper is to examine market integration between Australian and U.S. beef prices at the farmgate level. If these two prices are found to be integrated then it can be alleged that Australian beef prices can be used as a world price in empirical analyses and/or as a ‘reference price’ to measure the level of support accorded the U.S. beef sector. Co‐integration analysis and a time‐varying parameter estimation procedure based on the Kalman filter model are applied. The paper distinguishes between steer and cow beef segments and it uses monthly data over the 1972:1 to 1993:2 period. The results indicate that Australian and U.S. beef prices are co‐integrated, albeit not fully and that the degree of convergence between the various price pairs has not substantially increased over time. The results also suggest that Australian prices can not unequivocally be adopted as a world price in empirical analyses.