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Statistical demand functions for food in the USA and the Netherlands
Author(s) -
De Crombrugghe Denis,
Palm Franz C.,
Urbain JeanPierre
Publication year - 1997
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/(sici)1099-1255(199709/10)12:5<615::aid-jae455>3.0.co;2-l
Subject(s) - endogeneity , economics , econometrics , cointegration , income elasticity of demand , aggregate data , homogeneity (statistics) , survey data collection , consumption (sociology) , time series , multivariate statistics , price elasticity of demand , elasticity (physics) , microeconomics , statistics , mathematics , social science , materials science , sociology , composite material
This paper reports results of an extensive analysis of statistical demand functions for food using household survey data and aggregate time‐series data on food consumption in the USA and The Netherlands. Using the model put forward by Tobin (1950) for survey data, we find that socio‐economic information on the composition, education, and status of households adds little to the explanation of food consumption. The income elasticity of food consumption decreases over time in the USA but increases in The Netherlands. Applying multivariate cointegration analysis to the time‐series data, we find that strict price homogeneity, structural stability, and weak exogeneity of prices have to be rejected statistically at conventional significance levels, whereas weak exogeneity of food consumption cannot be rejected. The long‐run income elasticity tends to decrease over time for US data and is roughly constant for Dutch data. The findings corroborate earlier findings for the survey data. The rejection of price exogeneity is consistent with Tobin's model which treats prices as endogenous. © 1997 John Wiley & Sons, Ltd.