Cointegration and prediction analysis of market supply in the Dutch pig-farming industry

Abstract

In this paper we derive a restricted vector err or-correction model (RVECM) to predict the Dutch gross indigenous pig production (GIP). For this purpose, we model the long-run supply behaviour of the producers of piglets and fattened pigs. We supplemented Johansen's maximum likelihood procedure with the asymptotic least-squares method to test the nonlinear cross-equation parameter restrictions in the long-run model. Our empirical results comply with the theoretical long-run model and show that the RVECM GIP predictions are slightly more accurate than the forecasts prepared by the Dutch Central Bureau of Statistics for the European Commission