An Analysis of UK Net Beef Imports during the Mad Cow Crisis: Implications of a J-Shaped Curve
The J-shaped curve derived from our net beef import quantity analysis stems not from a currency depreciation but from a combination of a lack of consumer demand for domestic beef products and from insufficient excess supply on the international market. Using the Shiller lag model, we find that the exchange rate moves in tandem with net import quantities over the height of the crisis indicating a decrease in domestic demand. We also find an increase in prices for international beef during the same period, which suggests insufficient excess supply of beef products on the international market instigating the pound depreciation in the years following the height of the Mad Cow crisis. The major implication of this result is to highlight the potential lack of immediate excess supply of agricultural goods on the international market when an agricultural good or animal herd is annihilated by a bio-terrorist attack.