Trade, tastes and Nutrition in India
This paper introduces habit formation into an otherwise standard model of international trade. Household tastes evolve over time to favor foods consumed as a child. The opening of trade causes preferred goods to rise in price, as these were relatively inexpensive in autarky. Neglecting the correlation between tastes and agro-climatic endowments overstates the short-run nutritional gains from agricultural trade liberalization and masks potential caloric losses for laborers. I examine the predictions of this model of trade with habit formation using household survey data from India, both by looking across Indian regions and by examining the consumption patterns of inter-state migrants.
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- Raghbendra Jha & K.V. Bhanu Murthy & Anurag Sharma, 2005. "Market Integration in Wholesale Rice Markets in India," ASARC Working Papers 2005-03, The Australian National University, Australia South Asia Research Centre.
- James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
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- John Kennan, 1989. "Simultaneous Equations Bias in Disaggregated Econometric Models," Review of Economic Studies, Oxford University Press, vol. 56(1), pages 151-156.
- James Melvin & Robert Waschik, 2001. "The neoclassical ambiguity in the specific factor model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(3), pages 321-337.
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