The Hog Cycle as Harmonic Motion

This paper presents a theory of the hog cycle as true harmonic motion, arising from "feedback," a widely occurring phenomenon in which a stimulus induces a response which acts to alter the stimulus after a fixed delay. In the model of the hog cycle, it is postulated that the signal is the price of hogs, or more accurately the hog-corn price ratio which is a measure of current profitability of hog production; the response is a change in the rate of production of hogs; and the fixed delay is the biologically determined time required to produce a market hog. The supply response parameter, being a rate of change of planned production from current levels, does not correspond to slope or elasticity of a static supply curve, and little or no economic theory exists to account for the magnitude, or even the existence, of a dynamic supply parameter of this sort, though it has been observed by a number of students of the hog cycle. The nature of the supply response differs fundamentally from that of the cobweb theorem, where producers' decisions are assumed to refer to a short-run supply curve. This is the feature of the model that leads to a four-year cycle instead of the two-year cycle that most naturally emerges from the cobweb theorem.