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On Price Endogeneity in the Analysis of Food Demand in China

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  • Hovhannisyan, Vardges
  • Bozic, Marin

Abstract

Price endogeneity has been ignored in previous analyses of food demand in China. We examine agricultural input price data from the China National Bureau of Statistics and use reduced-form price equations to account for price endogeneity in this setting. Applying our unique econometric approach to the analysis of provincial-level food demand in China, we find strong statistical evidence of price endogeneity. Models that ignore price endogeneity result in substantially biased elasticities and misleading estimates of future food demand in China.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:aaea14:169767
    DOI: 10.22004/ag.econ.169767
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    Keywords

    Agricultural and Food Policy; Consumer/Household Economics; Demand and Price Analysis;
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