The Exogenous Effect of Corn Prices on Beef Prices in the U.S. Using R&D as an Instrumental Variable
نویسندگان
چکیده
This paper examines the relationship between various types of corn research and development (R&D) and corn prices in the United States through a fixed effects panel data model. This research explores R&D investment from both nonprofit and for-profit institutions and the effect these have corn prices. In addition, we look at the effect that corresponding exogenous changes in corn prices have on beef prices. In general, we find that different types of R&D investment have different, yet significant effects on the price of corn. In addition, the exogenous effect of corn prices has a negative effect on the price of beef. We attribute this to the observation that farmers sell off their cattle earlier when prices of feed increase, thus decreasing the price of beef as the price of corn increases. This effect becomes larger in magnitude when R&D types are used as instrumental variables. JEL Codes: C33, C26, Q12, Q16
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