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Projecting World Food Demand Using Alternative Demand Systems

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  • Yu, Wusheng
  • Hertel, Thomas W.
  • Preckel, Paul V.
  • Eales, James S.

Abstract

Computable General Equilibrium (CGE) models are increasingly being used to project world food markets in order to support forward-looking policy analysis. Such projections hinge critically on the underlying functional form for representing consumer demand. Simple functional forms can lead to unrealistic projections by failing to capture changes in income elasticities of demand. We adopt as our benchmark the recently introduced AIDADS demand system and compare it with several alternaive demand systems currently in widespread use in CGE models. This comparison is conducted in the context of projections for disaggregated global food demand using a global CGE model. We find that AIDADS represents a substantial improvement, particularly for the rapidly growing developing countries. For these economies, the most widely used demand systems tend to over-predict future food demands, and hence overestimate future production and import requirements for agricultural products.

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Paper provided by International Association of Agricultural Economists in its series 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa with number 25905.

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Date of creation: 2003
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Handle: RePEc:ags:iaae03:25905

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Keywords: food demand; agricultural trade; functional form; demand system; CGE modeling; Demand and Price Analysis; D12; C68; F17; Q18;

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  1. Anderson, Kym & Dimaranan, Betina V. & Hertel, Thomas W. & Martin, William J., 1997. "Asia-Pacific food markets and trade in 2005: a global, economy-wide perspective," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(1), March.
  2. Nin, Alejandro & Hertel, Thomas W. & Foster, Kenneth & Rae, Allan, 2004. "Productivity growth, catching-up and uncertainty in China's meat trade," Agricultural Economics, Blackwell, vol. 31(1), pages 1-16, July.
  3. Jean-Marc Burniaux & Dominique van der Mensbrugghe, 1991. "Trade Policies in a Global Context: Technical Specifications of the Rural/Urban-North/South (RUNS) Applied General Equilibrium Model," OECD Development Centre Working Papers 48, OECD Publishing.
  4. Clements, Kenneth W & Selvanathan, Saroja, 1994. "Understanding Consumption Patterns," Empirical Economics, Springer, vol. 19(1), pages 69-110.
  5. John A.L. Cranfield & Thomas W. Hertel & James S. Eales & Paul V. Preckel, 1998. "Changes in the Structure of Global Food Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1042-1050.
  6. Lewbel, Arthur, 1991. "The Rank of Demand Systems: Theory and Nonparametric Estimation," Econometrica, Econometric Society, vol. 59(3), pages 711-30, May.
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  9. Delgado, Christopher L. & Rosegrant, Mark W. & Steinfeld, Henning & Ehui, Simeon K. & Courbois, Claude, 1999. "Livestock to 2020: the next food revolution," 2020 vision briefs 61, International Food Policy Research Institute (IFPRI).
  10. Coyle, William T. & Mark Gehlhar & Thomas W. Hertel & Zhi Wang & Wusheng Yu, 1998. "Understanding the Determinants of structural Change in World Food Markets," GTAP Working Papers 260, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  11. John Cranfield & Paul Preckel & James Eales & Thomas Hertel, 2000. "On the estimation of 'an implicitly additive demand system'," Applied Economics, Taylor & Francis Journals, vol. 32(15), pages 1907-1915.
  12. Bach, Christian Friis, et al, 2000. "Market Growth, Structural Change, and the Gains from the Uruguay Round," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 295-310, May.
  13. Mitchell,Donald O. & Ingco,Merlinda D. & Duncan,Ronald C., 1997. "The World Food Outlook," Cambridge Books, Cambridge University Press, number 9780521580106, April.
  14. J. A. L. Cranfield & James S. Eales & Thomas W. Hertel & Paul V. Preckel, 2003. "Model selection when estimating and predicting consumer demands using international, cross section data," Empirical Economics, Springer, vol. 28(2), pages 353-364, 04.
  15. Maureen T. Rimmer & Alan A. Powell, 1992. "Demand Patterns Across the Development Spectrum: Estimates for the AIDADS System," Centre of Policy Studies/IMPACT Centre Working Papers op-75, Victoria University, Centre of Policy Studies/IMPACT Centre.
  16. Jean-Marc Burniaux & Fran├žois Delorme & Ian Lienert & John P. Martin & Peter Hoeller, 1988. "Quantifying the Economy-Wide Effects of Agricultural Policies: A General Equilibrium Approach," OECD Economics Department Working Papers 55, OECD Publishing.
  17. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
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