Structural change via threshold effects: Estimating U.S. meat demand using smooth transition functions

This study is intended to address the question of structural change in meat demand. Inverse demand systems are modified to accommodate a variant of the Smooth Transition Autoregressive (STAR) models, the Smooth Transition Regression (STR) models. Structural change has been a contentious topic in the food demand literature. Historically, in the context of meat demand, some studies have found consumer preferences for meats have shifted, others contend that such findings are artifacts. This study re-examines U.S. meat demands for structural change. The timing of preference shifts and the reasons for those shifts is examined by combining classic consumer demand models with recent developments in time series modeling. Results show demands switch back and forth between demand regimes and underlying reasons for switching include sensitivity to macroeconomic variables in the overall economy.