Price Stabilization in the Taiwan Hog and Broiler Industries: Evidence from a STAR Approach

Hwang, Tsorng-Chyi and Chen, Meng-Gu and Chang, Chia-Lin (2010): Price Stabilization in the Taiwan Hog and Broiler Industries: Evidence from a STAR Approach.

Abstract

The paper examines the effectiveness of the price stabilization mechanism for the broiler and poultry industry in Taiwan during the period 1999 to 2008. After presenting some background information on the domestic marketing system and price stabilization mechanisms for the broiler and pork industry in Taiwan, the paper discusses the smooth transition autoregressive (STAR) methodology. Monthly hog and broiler price data from 1999 to 2008 at farm, import and retail levels are analyzed using the nonlinear, non-asymmetric logistic STAR model in order to determine price transmission structure. A price threshold parameter is used so that price transmission levels can vary, thereby allowing an examination of the efficacy with which the hog and broiler price stabilization mechanisms take effect.

• Item Type: MPRA Paper
• Language: English
• Keywords: Broiler industry, Pork industry, Price stabilization, Domestic marketing system, Smooth transition autoregressive (STAR) methodology
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q11 - Aggregate Supply and Demand Analysis ; Prices; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q14 - Agricultural Finance; C - Mathematical and Quantitative Methods > C0 - General > C01 - Econometrics

References

[1] Athanasiou, G., Karafyllis, I., Stelios, K., 2008. Price stabilization using buffer stocks. Journal of Economic Dynamics and Control 4, 1212–1235.

[2] Bigman, D., Reutlinger, S., 1979. Food price and supply stabilization: national buffer stocks and trade policies. American Journal of Agriculture Economics 61, 657–667.

[3] Cummings, R.J, Rashid, S., Gulati, A., 2006. Grain price stabilization experiences in Asia: What have we learned? Food Policy 31, 302–312.

[4] Dawe, D., 2001. How far down the path to free trade? The importance of rice price stabilization in developing Asia. Food Policy 26, 163–175.

[5] Phillips, P., Perron, P., 1988. Testing for a Unit Root in Time Series Regressions. Biometrika 75, 335–346.

[6] Said, S., Dickey D., 1984. Testing for unit roots in ARMA models of unknown order. Biometrika.71, 599–607.

[7] Schlenker, W., Roberts, M.J., 2006. Nonlinear effects of weather on corn yields. Review of Agricultural Economics 28, 391–398.

[8] Teräsvirta, T., 1994. Specification, estimation and evaluation of smooth transition autoregressive models. Journal of the American Statistical Association 89, 208–218.

[9] Tong, H., 1978. On a threshold model in pattern recognition and signal processing, C.H. Chen (Ed.), Amsterdam: Sijhoff and Noordhoff.

[10] Wright, B., Williams, J., 1982. The economic role of commodity storage, The Economic Journal 92, 596–614.