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Food and Cross-Country Income Comparisons

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  • Grace Chua Ee Lin

    (UWA Business School, The University of Western Australia)

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    Abstract

    This paper examines the idea of making international income comparisons on the basis of food consumption patterns. We commence by giving a brief review on the different ways of measuring real income and highlight some of the problems. Next, we embark on an international journey by analyzing food consumption in 43 countries using Working’s (1943) model as the “travel mode”. We show that this model yields results which are consistent with other studies. In particular, our data seem to obey the so-called “strong version of Engel’s law”, according to which a doubling of income is associated with the food budget share declining by 10 percentage points. On this basis, we then use the food budget share to develop an alternative measure of real income. We provide evidence that this new measure is superior to conventional PPP versions of gross domestic product and consumption.

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    File URL: http://www.biz.uwa.edu.au/home/research/discussionworking_papers/economics/2003?f=151069
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    Bibliographic Info

    Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 03-14.

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    Length: 28 pages
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:uwa:wpaper:03-14

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    References

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    1. Aasness, Jorgen & Rodseth, Asbjorn, 1983. "Engel curves and systems of demand functions," European Economic Review, Elsevier, vol. 20(1-3), pages 95-121, January.
    2. Clements, Kenneth W & Selvanathan, Antony & Selvanathan, Saroja, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
    3. Musgrove, Philip, 1985. "Household Food Consumption in the Dominican Republic: Effects of Income, Price, and Family Size," Economic Development and Cultural Change, University of Chicago Press, vol. 34(1), pages 83-101, October.
    4. Chung, Ching-Fan & Lopez, Elena, 1988. "A regional analysis of food consumption in Spain," Economics Letters, Elsevier, vol. 26(3), pages 209-213.
    5. Bruce W. Hamilton, 2001. "Using Engel's Law to Estimate CPI Bias," American Economic Review, American Economic Association, vol. 91(3), pages 619-630, June.
    6. Seale, James L., Jr. & Regmi, Anita & Bernstein, Jason, 2003. "International Evidence On Food Consumption Patterns," Technical Bulletins 33580, United States Department of Agriculture, Economic Research Service.
    7. Finke, Renate & Flood, Lennart R. & Theil, Henri, 1984. "Maximum likelihood and instrumental variable estimation of a consumer demand system for Japan and Sweden," Economics Letters, Elsevier, vol. 15(1-2), pages 13-19.
    8. William D. Nordhaus & James Tobin, 1972. "Is Growth Obsolete?," NBER Chapters, in: Economic Research: Retrospect and Prospect Vol 5: Economic Growth, pages 1-80 National Bureau of Economic Research, Inc.
      • William D. Nordhaus & James Tobin, 1973. "Is Growth Obsolete?," NBER Chapters, in: The Measurement of Economic and Social Performance, pages 509-564 National Bureau of Economic Research, Inc.
    9. Barten, Anton P, 1993. "Consumer Allocation Models: Choice of Functional Form," Empirical Economics, Springer, vol. 18(1), pages 129-58.
    10. Blanciforti, Laura & Green, Richard, 1983. "An Almost Ideal Demand System Incorporating Habits: An Analysis of Expenditures on Food and Aggregate Commodity Groups," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 511-15, August.
    11. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
    12. Izan, Haji Y. & Clements, Kenneth W., 1979. "A cross-cross-section analysis of consumption patterns," Economics Letters, Elsevier, vol. 4(1), pages 83-86.
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