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Quantifying the Structure of Food Demand in China Using a Generalized Quadratic AIDS Specification

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  • Hovhannisyan, Vardges
  • Gould, Brian W.
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    Abstract

    This manuscript is used to examine food demand structure and its dynamics for 11 commodities in urban China. The analysis is based on household-level expenditure survey data for two cross-sectional surveys of Chinese households pertaining to food expenditure patterns during 1995 and 2003. A major focus of this presentation is on the pre-committed component of demand that is not accounted for by economic and demographic characteristics. We use the generalized quadratic almost ideal demand system (GQAIDS) for its empirical superiority to the GAIDS, and estimate the associated parameters via a full information maximum likelihood procedure (FIML) procedure, where we test for whether total food expenditure for home consumption (FAH) is endogenous. We also use quality adjusted commodity unit values to account for quality differences resulting from commodity aggregation and food choice. We find that the demand for FAH by surveyed households has changed for a majority of the 11 commodities included in the analysis. We find that more than a third of vegetables consumed in 1995 were due to pre-committed demand, while no traditional Chinese food staple had positive significant pre-committed demand in 2003. With the changing food structure this may be indicative of an increased desire for flexibility in the Chinese diet.

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    Bibliographic Info

    Paper provided by Southern Agricultural Economics Association in its series 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida with number 56422.

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    Date of creation: 2010
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    Handle: RePEc:ags:saea10:56422

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    Related research

    Keywords: Generalized Quadratic Almost Ideal Demand System; pre-committed demand; expenditure endogeneity; food preferences.; Agricultural and Food Policy; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; D11; D12;

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    1. Bollino, Carlo Andrea, 1987. "Gaids: a generalised version of the almost ideal demand system," Economics Letters, Elsevier, vol. 23(2), pages 199-202.
    2. Fengxia Dong & Frank H. Fuller, 2007. "Changing Diets in China's Cities: Empirical Fact or Urban Legend?," Center for Agricultural and Rural Development (CARD) Publications 06-wp437, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Anonymous, 2002. "China'S Food And Agriculture: Issues For The 21st Century," Agricultural Information Bulletins 33723, United States Department of Agriculture, Economic Research Service.
    4. Brian Gould & Hector Villarreal, 2002. "Adult equivalence scales and food expenditures: an application to Mexican beef and pork purchases," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1075-1088.
    5. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
    6. LaFrance, Jeffrey T., 1991. "When Is Expenditure "Exogenous" In Separable Demand Models?," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(01), July.
    7. Guo, Xuguang, et al, 2000. "Structural Change in the Impact of Income on Food Consumption in China, 1989-1993," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 737-60, July.
    8. Zhang, Xiaobo & Mount, Timothy D. & Boisvert, Richard N., 2001. "The Demand For Food Grain In China : New Insights Into A Controversy," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 30(1), April.
    9. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    10. Brian W. Gould & Hector J. Villarreal, 2006. "An assessment of the current structure of food demand in urban China," Agricultural Economics, International Association of Agricultural Economists, vol. 34(1), pages 1-16, 01.
    11. Alston, Julian M. & Chalfant, James A. & Piggott, Nicholas E., 2001. "Incorporating demand shifters in the Almost Ideal demand system," Economics Letters, Elsevier, vol. 70(1), pages 73-78, January.
    12. Jeffrey T. LaFrance, 1993. "Weak Separability in Applied Welfare Analysis," Development Research Unit Working Paper Series archive-26, Monash University, Department of Economics.
    13. Brian W. Gould, 2003. "An Empirical Assessment of Endogeneity Issues in Demand Analysis for Differentiated Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 605-617.
    14. Zhuang, Renan & Abbott, Philip, 2007. "Price elasticities of key agricultural commodities in China," China Economic Review, Elsevier, vol. 18(2), pages 155-169.
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