THE ROLE OF ASYMMETRIC PRICE TRANSMISSION AND STRUCTURAL BREAKS IN THE RELATIONSHIP BETWEEN COSTA RICAN MARKETS OF LIVESTOCK CATTLE, BEEF AND MILK

The research analyzes the price transmission among the Costa Rican markets of cattle, beef and milk, accounting for asymmetric behavior and structural breaks. Monthly price data covering the first month of 1998 to the fourth month of 2008 were used. Price transmission between each market pair was found. The Price adjustment is consistent at 1% of significant with the behaviour expected. Cattle prices adjust in the milk - cattle relationship, beef meat prices adjust in the cattle - beef meat relation and in the milk - beef meat relation. This finding supports the statement regarding the leading position of “Dos Pinos” as the main player in the market. The results of the asymmetric analysis are not as expected. The coefficients of both adjustments (positive and negative) are not significantly different. The equations allowing for structural break affects the estimates: first after the break the elasticities became higher than 1, second there is more evidence of cointegration and third the adjustment coefficients are significant only when a change in the long run is allowed.