Price transmission in the Spanish bovine sector: the BSE effect |
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Authors: | Islam Hassouneh Teresa Serra José M Gil |
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Institution: | Centre de Recerca en Economia i Desenvolupament Agroalimentaris (CREDA)-UPC-IRTA, Parc Mediterrani de la Tecnologia, Edifici ESAB, C/Esteve Terrades, 8 08860 Castelldefels, Barcelona, Spain |
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Abstract: | A regime-switching vector error correction model is applied to monthly price data to 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. |
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Keywords: | C22 C32 |
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