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U.S. Food and Nutrient Demand and the Effects of Agricultural Policies

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  • LaFrance, Jeffrey T.

Abstract

An econometric model of annual per capita U.S. food and nutrition demand is developed. The model is a flexible, full rank two Gorman polar form. It is strictly aggregable across income, demographic variables, and variations in micro preference parameters. Parametric conditions for global quasi-concavity of the (quasi-)utility function are derived. The model is implemented with annual time series data on U.S. per capita food consumption for the sample period 1918-1994. A battery of new test statistics are developed for and applied to the following hypotheses: (1) strict exogeneity of income or total expenditures; (2) global symmetry and negative semidefiniteness of the Slutsky substitution matrix; (3) parameter stability in a multivariate, nonlinear regression model based on within sample residuals; and (4) weak separability of food items from all other goods in the representative consumer's preference function. The empirical results are very encouraging with respect to the strictures of economic theory, heretofore a virtually unheard of outcome. The model is used to analyze the food and nutrient consumption and consumer welfare impacts of the U.S. dairy program.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt52h9v4dq.

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Date of creation: 01 Jan 1999
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Handle: RePEc:cdl:agrebk:qt52h9v4dq

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Related research

Keywords: agricultural policies; consumers' demand; food consumption; food supply; nutrition;

References

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  1. Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
  2. Jamison, John A., 1971. "Marketing Orders and Public Policy for the Fruit and Vegetable Industries," Food Research Institute Studies, Stanford University, Food Research Institute, issue 03.
  3. Pudney, Steven E, 1981. "Instrumental Variable Estimation of a Characteristics Model of Demand," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 417-33, July.
  4. Meisner, James F., 1979. "The sad fate of the asymptotic Slutsky symmetry test for large systems," Economics Letters, Elsevier, vol. 2(3), pages 231-233.
  5. Ippolito, Richard A & Masson, Robert T, 1978. "The Social Cost of Government Regulation of Milk," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 33-65, April.
  6. Howe, Howard & Pollak, Robert A & Wales, Terence J, 1979. "Theory and Time Series Estimation of the Quadratic Expenditure System," Econometrica, Econometric Society, vol. 47(5), pages 1231-47, September.
  7. Edgerton, David L., 1993. "On The Estimation Of Separable Demand Models," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(02), December.
  8. Blackorby, Charles & Donaldson, David & Moloney, David, 1984. "Consumer's Surplus and Welfare Change in a Simple Dynamic Model," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 171-76, January.
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  10. van Daal, Jan & Merkies, Arnold H Q M, 1989. "A Note on the Quadratic Expenditure Model," Econometrica, Econometric Society, vol. 57(6), pages 1439-43, November.
  11. Jeffrey T. LaFrance & W. Michael Hanemann, 1989. "The Dual Structure of Incomplete Demand Systems," Development Research Unit Working Paper Series archive-21, Monash University, Department of Economics.
  12. Leathers, Howard D., 1979. "A Primer On Nutrition Policy In The United States," Staff Papers 13268, University of Minnesota, Department of Applied Economics.
  13. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
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  20. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  21. Jeffrey T. LaFrance & Harry D. Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," Development Research Unit Working Paper Series archive-34, Monash University, Department of Economics.
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  25. Epstein, Larry G, 1982. "Integrability of Incomplete Systems of Demand Functions," Review of Economic Studies, Wiley Blackwell, vol. 49(3), pages 411-25, July.
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Citations

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Cited by:
  1. Just, David R., 2006. "Behavioral Economics, Food Assistance, and Obesity," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(2), October.
  2. LaFrance, Jeffrey T., 1999. "An Econometric Model of the Demand for Food and Nutrition," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2z5516c2, Department of Agricultural & Resource Economics, UC Berkeley.
  3. Hawkes, Corinna & Friel, Sharon & Lobstein, Tim & Lang, Tim, 2012. "Linking agricultural policies with obesity and noncommunicable diseases: A new perspective for a globalising world," Food Policy, Elsevier, vol. 37(3), pages 343-353.
  4. LaFrance, J. T. & Beatty, T. K. M. & Pope, R. D. & Agnew, G. K., 2002. "Information theoretic measures of the income distribution in food demand," Journal of Econometrics, Elsevier, vol. 107(1-2), pages 235-257, March.
  5. J paul Dunne & Beverly Edkins, 2008. "The Demand For Food In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 76(1), pages 104-117, 03.

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