THE GENERALIZED COMPOSITE COMMODITY THEOREM AND FOOD DEMAND ESTIMATION

Abstract

This paper 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 tests of the Generalized Composite Commodity Theorem found in the literature. We compute food demand elasticities using cointegration applied to a convenient but nonlinear functional form. Estimates are based on consumer reported expenditure data rather than commercial disappearance data.Demand and Price Analysis,