Conditional and unconditional food demand elasticities in a dynamic multistage demand system
Abstract:This paper estimates conditional and unconditional demand elasticities in a three stage analysis of consumer demand for food and non-food items in Greece. A dynamic version of the AIDS model is specified and estimated, and full system misspecification tests applied. Correction formulas for price and expenditure elasticities are used to calculate unconditional elasticities from conditional demand sub-systems. All food items rank as price inelastic. Deviations between the calculated conditional and unconditional price and expenditure elasticities are found to be significant, demonstrating the importance of correcting conditional elasticities before they can be used for policy purposes or welfare analyses.
Document Type: Research Article
Affiliations: 1: Research Assistant, Agricultural University of Athens, Iera Odos 75, 118 55 Athens, Italy 2: Chief - Raw Materials, Tropical and Horticultural Products Service Commodities and Trade Division, Food and Agriculture Organisation of the United Nations, Viale delle Terme di Caracalla, 00100 Rome, Italy
Publication date: 2003-03-01