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Using Elasticities from an Almost Ideal Demand System? Watch Out for Group Expenditure!

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  • Wyatt Thompson

Abstract

Group expenditure has often been treated as exogenous when estimating demand parameters for a group of commodities with an almost ideal demand system. Researchers draw demand elasticities from past literature to use in their own analysis, but elasticities contingent on exogenous group expenditure may be inappropriate. Here, the approach is considered in the case of Japanese meat demand with a simple equation added to estimate group expenditures. The results show that elasticities should be revised and that a group expenditure equation is not a panacea as it may result in the violation of theoretical restrictions, such as symmetry. Copyright 2004, Oxford University Press.

Suggested Citation

  • Wyatt Thompson, 2004. "Using Elasticities from an Almost Ideal Demand System? Watch Out for Group Expenditure!," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1108-1116.
  • Handle: RePEc:oup:ajagec:v:86:y:2004:i:4:p:1108-1116
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    File URL: http://hdl.handle.net/10.1111/j.0002-9092.2004.00656.x
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    Cited by:

    1. Lichtenberg, Erik & Strand, Ivar E., Jr., 2000. "Joint Adoption Of Multiple Technologies: A Dual, Latent Demand Approach," Working Papers 28566, University of Maryland, Department of Agricultural and Resource Economics.
    2. Oyinbo, O. & Omolehin, R. A. & Abdulsalam, Z., 2013. "Analysis of the Demand for Rice in Kaduna State, Nigeria," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(3), September.
    3. Zhou, De & Yu, Xiaohua & Abler, David G. & Chen, Danhong, 2014. "Projecting Meat and Cereals Demand for China Based on a Meta-Analysis of Income Elasticities," Discussion Papers 168528, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Bakhshoodeh, M., 2010. "Impacts of world prices transmission to domestic rice markets in rural Iran," Food Policy, Elsevier, vol. 35(1), pages 12-19, February.
    5. repec:bla:jageco:v:68:y:2017:i:2:p:386-406 is not listed on IDEAS
    6. Hovhannisyan, Vardges & Bozic, Marin, 2014. "On Price Endogeneity in the Analysis of Food Demand in China," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169767, Agricultural and Applied Economics Association.
    7. repec:ebl:ecbull:v:3:y:2008:i:14:p:1-10 is not listed on IDEAS
    8. Aditya R. Khanal & Ashok K. Mishra & Walter Keithly, 2016. "Heterogeneity in Food Demand among Rural Indian Households: The Role of Demographics," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 517-544, September.
    9. Ming-Feng Hsieh & Paul D. Mitchell & Kyle W. Stiegert, 2009. "Potato demand in an increasingly organic marketplace," Agribusiness, John Wiley & Sons, Ltd., vol. 25(3), pages 369-394.
    10. Bo Xiong & Daniel Sumner & William Matthews, 2014. "A new market for an old food: the U.S. demand for olive oil," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 107-118, November.
    11. Davis, Christopher G. & Stefanova, Stela & Hahn, William F. & Yen, Steven T., 2008. "Complements and Meat Demand in the U.S," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6406, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Manami Ogura, 2008. "The examination of the validity of the Divisia price index for the almost ideal demand system model: Some Monte Carlo results," Economics Bulletin, AccessEcon, vol. 3(14), pages 1-10.
    13. Hovhannisyan, Vardges & Bozic, Marin, 2013. "On Price Endogeneity in the Analysis of Food Demand in China," Staff Papers 159771, University of Minnesota, Department of Applied Economics.
    14. Tenkorang, Frank & Dority, Bree L. & Bridges, Deborah & Lam, Eddery, 2015. "Relationship between ethanol and gasoline: AIDS approach," Energy Economics, Elsevier, vol. 50(C), pages 63-69.
    15. repec:ags:usao13:148045 is not listed on IDEAS
    16. Stephen Macdonald & Suwen Pan & Darren Hudson & Francis Tuan, 2014. "Toward a consumer economy in China: implications of changing wage policies for U.S. cotton exports," Agricultural Economics, International Association of Agricultural Economists, vol. 45(4), pages 513-524, July.
    17. Davis, Christopher G. & Blayney, Donald P. & Cooper, Joseph C. & Yen, Steven T., 2009. "An Analysis of Demand Elasticities for Fluid Milk Products in the U.S," 2009 Conference, August 16-22, 2009, Beijing, China 51791, International Association of Agricultural Economists.
    18. Zheng, Yuqing & Kaiser, Harry M., 2008. "Advertising and U. S. Nonalcoholic Beverage Demand," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(02), pages 147-159, October.
    19. Pan, Suwen & Fang, Cheng & Sanogo, Issa & Mutuc, Maria Erlinda M., 2011. "Food Calorie Intake and Food Security under Grain Price Inflation: Evidence from Malawi," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103266, Agricultural and Applied Economics Association.
    20. repec:bpj:bjafio:v:15:y:2017:i:1:p:18:n:7 is not listed on IDEAS

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