Price Transmission and Food Scares in the U.S. Beef Sector
Posted: 4 Nov 2005
Date Written: June 2005
The advent of mad cow disease in Canada and in the United States raises numerous concerns regarding consumer reaction to information in the United States. To examine the role of consumer reaction to information we examine the response of price spreads in the U.S. beef market to a Food Safety Index derived from Lexis-Nexis. Specifically, we estimate a vector error correction model to examine the long- and short-run effect of news on price spreads. Our results indicate that informational shocks are fairly transient in the retail prices, but persist at the wholesale and farm level.
Keywords: vector error correction, food safety, price spread, beef markets
JEL Classification: Q12, L11, C32
Suggested Citation: Suggested Citation