Economic Dynamics of the German Hog-Price Cycle

Economic Dynamics of the German Hog-Price Cycle

Blog Article

We investigated the economic dynamics of the German hog-price cycle with an innovative ‘diagnostic’ modeling approach.Hog-price cycles are conventionally modeled stochastically—most recently as randomly-shifting sinusoidal oscillations.Alternatively, we applied Nonlinear Time Series satisfyer pro penguin next generation analysis to empirically reconstruct a deterministic, low-dimensional, and nonlinear attractor from observed hog prices.We next formulated a structural (explanatory) model of the pork industry to synthesize the empirical hog-price attractor.

Model simulations demonstrate that low price-elasticity of demand contributes to aperiodic price cycling – a well know result – and further reveal two other important driving factors: investment irreversibility (caused by high specificity of technology), and liquidity-driven synovex one grass investment behavior of German farmers.