Estimating investment rigidity within a threshold regression framework: The case of US hog production sector

Abstract

This article addresses the issues of investment/disinvestment asymmetry and a possible existence of a sluggish regime in the demand for a quasi-fixed input in the U.S. hog production sector. Adopting a new threshold estimation procedure, quarterly data from 1970 through 2002 are used to estimate a regime-dependent investment demand equation for a quasi-fixed input, taking sows as a proxy. The results support the existence of three regimes over alternative specifications precluding the sluggish regime, confirming the existence of asset fixity in hog production. The results also highlight the importance of accounting for investment rigidity when estimating hog supply and variable input demands

Keywords

asset fixity; inaction regime; investment asymmetry; threshold model

Published in

American Journal of Agricultural Economics
2007, volume: 89, number: 1, pages: 36-51
Publisher: BLACKWELL PUBLISHING

SLU Authors

• Hoffmann, Ruben

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Agricultural Science
Social Sciences
Economics and Business

Publication identifier

• DOI: https://doi.org/10.1111/j.1467-8276.2007.00961.x

Permanent link to this page (URI)

https://res.slu.se/id/publ/9951