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Separability between own food production and consumption in Turkey

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  • Hasan Tekguc

    (Mardin Artuklu Univeristy)

Abstract

Complete markets imply the separation of food production and consumption decisions such that they can be modeled to occur sequentially and can be studied independently. Separation is very often assumed implicitly in empirical studies of food demand. If there is such separation, then food sourced within the household should not have any influence upon the budget share of each food group. Using this insight, this paper first develops a procedure to test for the separation of household food production and consumption decisions. Furthermore, it incorporates the testing procedure into the Almost Ideal Demand Systems model and utilizes survey data from 2003 for Turkey for empirical testing. It concludes that the separation assumption is unwarranted for Turkey. Next, It investigates the extent of bias in elasticity estimates when separation assumption is unwarranted. It concludes that ignoring the nonseparation of consumption and production decisions in rural areas leads to significant overestimation of food expenditure elasticity for the dairy products and eggs and own-price elasticity for bread and cereals.

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Bibliographic Info

Paper provided by Mardin Artuklu Univeristy, Department of Economics in its series Working Papers with number 2011-01.

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Length: 36 pages
Date of creation: Apr 2011
Date of revision:
Publication status: published (Review of Economics of the Household (2012). 10(3) 423-439)
Handle: RePEc:mrd:martwp:2011-01

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Postal: Mardin Artuklu Univeristy Sosyal Bilimler Enstitusu Diyarbakir Yolu, Yenisehir Mardin, 47100 Turkey
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Web page: http://iktisat.artuklu.edu.tr/
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Keywords: Agricultural household models; own-produced food consumption; Turkey; elasticity estimates; dairy products;

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References

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  1. Cuma Akbay & Ismet Boz & Wen. S. Chern, 2008. "Household food consumption in Turkey: a reply," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(1), pages 99-102, March.
  2. Davidova, Sophia & Fredriksson, Lena & Bailey, Alastair, 2009. "Subsistence and Semi-subsistence Farming in Selected EU New Member States," 111th Seminar, June 26-27, 2009, Canterbury, UK 52801, European Association of Agricultural Economists.
  3. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
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  6. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
  7. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-417, November.
  8. Hoddinott, John & Haddad, Lawrence, 1995. "Does Female Income Share Influence Household Expenditures? Evidence from Cote d'Ivoire," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 77-96, February.
  9. Goksel Armagan & Cuma Akbay, 2008. "An econometric analysis of urban households' animal products consumption in Turkey," Applied Economics, Taylor & Francis Journals, vol. 40(15), pages 2029-2036.
  10. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  11. Andreas C. Drichoutis & Stathis Klonaris & Panagiotis Lazaridis & Rodolfo M. Nayga, 2008. "Household food consumption in Turkey: a comment," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(1), pages 93-98, March.
  12. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-51, November.
  13. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
  14. 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.
  15. Cuma Akbay & Ismet Boz & Wen S. Chern, 2007. "Household food consumption in Turkey," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 34(2), pages 209-231, June.
  16. Heien, Dale & Wessells, Cathy Roheim, 1990. "Demand Systems Estimation with Microdata: A Censored Regression Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 365-71, July.
  17. Steven Yen & Kamhon Kan & Shew-Jiuan Su, 2002. "Household demand for fats and oils: two-step estimation of a censored demand system," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1799-1806.
  18. Harald Tauchmann, 2005. "Efficiency of two-step estimators for censored systems of equations: Shonkwiler and Yen reconsidered," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 367-374.
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Cited by:
  1. Bilgic, Abdulbaki & Yen, Steven T., 2013. "Household food demand in Turkey: A two-step demand system approach," Food Policy, Elsevier, vol. 43(C), pages 267-277.

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