Supply response and demand for basic grains in El Salvador

As in many developing nations, basic grains in El Salvador have a critical importance in the rural economy and in the daily diet. Information on price elasticities of supply and demand can be crucial for better informed policy making. This article pre‐tests for the suitability of price expectation models and then estimates a market model for each grain. Empirical results point out strong inelasticities in demand and supply for all grains. For maize and red beans (but not for sorghum and rice), low degrees of partial adjustment indicate their high tendency to continue cultivation in spite of adverse economic conditions. © 1998 John Wiley & Sons, Inc.