The Generalized Composite Commodity Theorem and Food Demand Estimation |
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| Authors: | Albert J. Reed J. William Levedahl Charles Hallahan |
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| Affiliation: | Albert J. Reed and J.William Levedahl are senior economists and Charles Hallahan is statistician with the Economics Research Service of the U.S. Department of Agriculture. |
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| Abstract: | This article reports tests of aggregation over consumer food products and estimates of aggregate food demand elasticities. Evidence that food demand variables follow unit root processes leads us to build on and simplify existing tests of the Generalized Composite Commodity Theorem. We compute food demand elasticities using a method of cointegration that is shown to apply to a convenient but nonlinear functional form. Estimates are based on consumer reported expenditure data rather than commercial disappearance data. |
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| Keywords: | cointegration food demand generalized composite commodity theorem nonlinear models |
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