CATTLE CYCLES, EXPECTATIONS AND THE AGE DISTRIBUTION OF CAPITAL
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This paper builds a dynamic forward-looking model describing the approximate ten-year cattle cycle. The theoretical model improves on existing models by (1) allowing cow-calf operators to make investment decisions on both the cow and calf margins, (2) formally recognizing the age distribution of the capital stock, and (3) considering a mixed scheme of rational and naive expectations. The model is then calibrated and used to simulate artificial data that endogenously generates ten-year cycles in the total stock of cattle.