Abstract:
A regime-switching vector error correction model is applied to monthly price data to assess
the impact of BSE outbreaks on price relationships and patterns of transmission among farm and
retail markets for bovine in Spain. To evaluate the degree to which price transmission is affected by
BSE food scares, a BSE food scare index is developed and used to determine regime-switching.
Results suggest that BSE scares affect beef producers and retailers differently. Consumer prices are
found to be weakly exogenous and not found to react to BSE scares, while producer prices
conversely adjusted. The magnitude of the adjustment is found to depend on the magnitude of the
BSE scare.
Description:
assess the impact of Bovine Spongiform Encephalopathy (BSE) outbreaks on price relationships and patterns of transmission among farm and retail markets for bovines in Spain. To evaluate the degree to which price transmission is affected by BSE food scares, a BSE food scare index is developed and used to determine regime switching. Results suggest that BSE scares affect beef producers and retailers differently. Consumer prices are found to be weakly exogenous and not found to react to BSE scares, while producer prices are conversely adjusted. The magnitude of the adjustment is found to depend on the magnitude of the BSE scare.
