A multistage complete system estimation of U.S. food demand elasticities
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We revisit the complete system of U.S. demand for food by employing a differential form demand system approach. Price and expenditure elasticities at retail level for 37 food commodities and one nonfood sector are estimated covering the period 1953-2008. We find that the estimated composite own-price elasticities of food groups have increased and the estimated composite cross-price elasticities of food groups have decreased in absolute magnitudes as compared with the earlier study. In addition, this study shows that there are considerable differences in the complementary and substitution relationships among some of food groups as compared with earlier study. These changes in the food demand relationship reflect changes in consumption behavior or lifestyle, which would be useful to researchers and policy makers alike for forecasting future demands and in appraising the likely outcomes of potential changes in national food programs.