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Estimating Structural Change with Smooth Transition Regressions: an Application to Meat Demand

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  • Holt, Matthew T.
  • Balagtas, Joseph V.

Abstract

This paper explores the role of structural change in systems of demand equations. Specifically, we adapt the time—varying regression framework of Lin and Teräsvirta (1994), which in turn is related to the dynamic smooth transition models introduced by Teräsvirta (1994). Unlike previous efforts at modeling structural change in demand systems, we do not impose the nature of the change to be monotonic—several non-monotonic alternatives are considered. An application is presented using the Almost Ideal Inverse Demand System (IAIDS) applied to U.S. meat demand data, 1960-2004. Results show the importance of modeling structural change and that, moreover, the best-fitting model is associated with a form of symmetric, non-monotonic structural change.

Suggested Citation

  • Holt, Matthew T. & Balagtas, Joseph V., 2009. "Estimating Structural Change with Smooth Transition Regressions: an Application to Meat Demand," MPRA Paper 15331, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:15331
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    6. Ning, Xin & Grant, Jason H. & Peterson, Everett B., 2021. "Estimating Structural Change in the Japanese Beef Import Market in the Wake of BSE: A Smooth Transition Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(1), January.
    7. Chapda Nana, Guy & Larue, Bruno & Gervais, Jean-Philippe, 2012. "Regional integration and dynamic adjustments: Evidence from gross national product functions for Canada and the United States," The North American Journal of Economics and Finance, Elsevier, vol. 23(2), pages 246-264.
    8. Asche, Frank & Zhang, Dengjun, 2013. "Testing Structural Changes in the U.S. Whitefish Import Market: An Inverse Demand System Approach," Agricultural and Resource Economics Review, Cambridge University Press, vol. 42(3), pages 453-470, December.
    9. Sanders, Daniel J. & Balagtas, Joseph Valdes & Gruere, Guillaume P., 2011. "Revisiting the palm oil boom: An examination of consumption in the oils complex," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103726, Agricultural and Applied Economics Association.
    10. Roheim, Cathy A. & Zhang, Dengjun, 2018. "Sustainability certification and product substitutability: Evidence from the seafood market," Food Policy, Elsevier, vol. 79(C), pages 92-100.
    11. Ma, Meilin & Wang, Holly & Hua, Yizhou & Qin, Fei & Yang, Jing, 2020. "African Swine Fever in China: Shocks, Responses, and Implications on Trade," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304469, Agricultural and Applied Economics Association.
    12. Walters, Lurleen M. & Jones, Keithly G., 2016. "Caribbean Food Import Demand: An Application of the CBS Differential Demand System," Journal of Food Distribution Research, Food Distribution Research Society, vol. 47(2), pages 1-19, July.
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    15. Hiroshi Mori & Toshio Inaba & John Dyck, 2016. "Accounting for structural changes in demand for foods in the presence of age and cohort effects: the case of fresh fish in Japan," Evolutionary and Institutional Economics Review, Springer, vol. 13(2), pages 363-379, December.
    16. Joseph V. Balagtas & Joseph Cooper & Patrick McLaughlin & Fei Qin, 2023. "Consumer demand for food at home and food away from home: Understanding economic linkages during the pandemic," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1604-1617, September.
    17. Rodriguez, Nestor & Eales, James S., 2015. "Structural Change via Threshold Effects: Estimating U.S. Meat Demand Using Smooth Transition Functions and the Effects of More Women in the Labor Force," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206522, Agricultural and Applied Economics Association.
    18. Rodriguez, Nestor & Eales, James S., 2012. "Structural Change via Threshold Effects: Estimating U.S. Meat Demand Using Smooth Transition Functions," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124366, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Inverse Almost Ideal Demand System; Meat Demand; Structural Change; Time-Varying Regression;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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