Meat Price Bubble in Iran: An Empirical Evidence from State‐Space Model

Price bubbles and price fluctuations of agricultural products are important issues that can significantly affect the welfare of consumers and producers. Therefore, in this study, the price bubbles in three main protein products, i.e. lamb, beef, and chicken meats, were investigated by the state-space model based on the Kalman filter using monthly time series data on the price of selected protein products from June 2001 to November 2020. We considered barley, concentrate feed prices, broiler chicken, and corn prices as the main important inputs used for producing lamb, beef, and chicken meat production, respectively. Also, real exchange rate and real oil price were used in the model. The results showed the differences in structures making positive and negative price bubbles, period and number of occurrences and the collapse of the bubble during the sample period. Also, in contrast to chicken prices, we concluded the price bubble of lamb and beef, is not significant compared to the real prices. For chicken meat, the main cause of price bubbles was due to the disruption of the marketing process of agricultural products, the lack of transparency of information, and contradictory government interventions in the market. To deal with the problem, the implementation of aggregated market information through merging technologies in Information and Communication Technology could be considered an efficient tool as suggested. In addition, government intervention should be prioritized on reforming the market structure instead of controlling prices.