A Dynamic Analysis of Food Demand Pattern in Urban Chin在中国城市的食品需求模式的动态分析.docVIP

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A Dynamic Analysis of Food Demand Pattern in Urban Chin在中国城市的食品需求模式的动态分析.doc

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A Dynamic Analysis of Food Demand Pattern in Urban Chin在中国城市的食品需求模式的动态分析

A Dynamic Analysis of Food Demand Patterns in Urban China Hui Liao and Wen S. Chern March 2007 Abstract Previous researchers have encountered difficulties in rationalizing the extremely high expenditure elasticities estimated for grain demanded by urban Chinese households. The high grain expenditure elasticities, which usually translate into high income elasticities, are doubtful for making a long-term prediction of grain demand in China. Unlike most previous studies using only statistic models, this study employs a dynamic Almost Ideal Demand System (DAIDS) incorporating demographic variables to explore the impact of habit effects as well as demographic impacts on household level food demand pattern in urban China. Most dynamic elements and demographic variables are found significant. The theoretical demand properties cannot be rejected in the DAIDS model while they are frequently rejected for static models. The dynamic AIDS model clearly provides improvement in estimating food demand elasticities as compared with their static counterparts. Keywords: dynamic almost ideal demand system, habit effect, grain, urban China. ____________________ Hui Liao is Graduate Research Associate and Wen S. Chern is Professor Emeritus, Department of Agricultural, Environmental and Development Economics, The Ohio State University, Columbus, Ohio. Introduction China, with its population surpassing the 1.3 billion mark in 2005, represents the largest market for agricultural goods and is among the fastest growing economies in the world during the last two decades. These attributes may be the main reasons that China has attracted considerable attentions from economists in efforts to assess its abilities to deal with “Who Will Feed China?” Understanding China’s food demand structure for predicting its long-term food demand, especially grain demand, is essential in these investigations. In this paper, we will focus on analyzing the expenditure elasticity of grain demand by urban Chine