Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-28T09:23:10.989Z Has data issue: false hasContentIssue false
  • English
  • Français

Short-Run Demand Relationships in the U.S. Fats and Oils Complex

Published online by Cambridge University Press:  28 April 2015

Barry K. Goodwin ,
Daniel Harper  and
Randy Schnepf
Barry K. Goodwin
Affiliation:
The Ohio State University, Columbus, OH
Daniel Harper
Affiliation:
North Carolina State University, Raleigh, NC
Randy Schnepf
Affiliation:
USDA Economic Research Service, Washington, DC
Get access Rights & Permissions [Opens in a new window]

Abstract

Fats and oils play a prominent role in U.S. dietary patterns. Recent concerns over the negative health consequences associated with fats and oils have led many to suspect structural change in demand conditions. Our analysis considers short run (monthly) demand relationships for edible fats and oils. In that monthly quantities of fats and oils are likely to be relatively fixed, an inverse almost ideal demand system specification is used. A smooth transition function is used to model a switching inverse almost ideal demand system that assesses short-run demand conditions for edible fats and oils in the United States. The results suggest that short-run demand conditions for fats and oils experienced a gradual structural shift that began in the late 1980s or early 1990s and persisted into the mid-1990s. Although this shift generally made price flexibilities more elastic, differences in scale flexibilities across regimes were modest in most cases. The results suggest that decreases in marginal valuations for most fats and oils in response to consumption increases are rather small. Scale flexibilities are relatively close to –1, suggesting near homothetic preferences for fats and oils.

Keywords

fats and oilsinverse demand systemstructural changeQOD1
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 35 , Issue 1 , April 2003 , pp. 171 - 184
Copyright
Copyright © Southern Agricultural Economics Association 2003

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, R.W. “Some Theory of Inverse Demand for Applied Demand Analysis.” European Economic Review 14(1980):281–90.CrossRefGoogle Scholar
Bacon, D., and Watts, D.G.. “Estimation of the Transition Between Two Intersecting Straight Lines.” Biometrika 58(1971):525–34.CrossRefGoogle Scholar
Barten, A.P., and Bettendorf, L.J.. “Price Formation of Fish: An Application of an Inverse Demand System.” European Economic Review 33(1989):1509–25.CrossRefGoogle Scholar
Berndt, E.R., and Savin, N.E.. “Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances.” Econome-trica 43(1975):937–57.CrossRefGoogle Scholar
Brown, D.J., and Schrader, L.F.. “Cholesterol Information and Shell Egg Consumption.” American Journal of Agricultural Economics 72(1990):548–55.CrossRefGoogle Scholar
Chern, W.S., Loehman, E.T., and Yen, S.T.. “Information, Health Risk Beliefs, and the Demand for Fats and Oils.” Review of Economics and Statistics 77(1995):555–64.CrossRefGoogle Scholar
Deaton, A., and Muellbauer, J.. “An Almost Ideal Demand System.” American Economic Review 70(1980):312–26.Google Scholar
Eales, J.S. “A Further Look at Flexibilities and Elasticities: Comment.” American Journal of Agricultural Economics 78(1996):1125–29.CrossRefGoogle Scholar
Eales, J.S., and Unnevehr, L.J.. “The Inverse Almost Ideal Demand System.” European Economic Review 38(1994):101–15.CrossRefGoogle Scholar
Geweke, J. “Exact Inference in the Inequality Constrained Normal Linear Regression Model.” Journal of Applied Econometrics 1(1986):127–41.CrossRefGoogle Scholar
Goddard, E.W., and Glance, S.. “Demand for Fats and Oils in Canada U.S., and Japan.” Canadian Journal of Agricultural Economics 37(1989):421–43.CrossRefGoogle Scholar
Goodwin, B.K., and Brester, G.W.. “Structural Change in Factor Demand Relationships in the U.S. Food and Kindred Products Industry.” American Journal of Agricultural Economics 77(1995):69–79.CrossRefGoogle Scholar
Gould, B.W., Cox, T.L., and Perali, F.. “Determinants of the Demand for Food Fats and Oils: The Role of Demographic Variables and Government Donations.” American Journal of Agricultural Economics 73(1991):212–21.CrossRefGoogle Scholar
Hansen, B.E. “Inference Wheat a Nuisance Parameter is Unidentified Under the Null Hypothesis.” Econometrica 64(1996):413–30.CrossRefGoogle Scholar
Hansen, B.E. “Inference in TAR Models.” Studies in Nonlinear Dynamics and Econometrics 2(April 1997):1–14. Internet site: http://mitpress.mit.edu/e-journals/SNDEarticles/v2n1.pdf (Accessed October 2002).Google Scholar
Hicks, J.R.A Revision of Demand Theory. Oxford, UK: Oxford University Press, 1956.Google Scholar
Huang, K.S. “A Further Look at Flexibilities and Elasticities: Reply.” American Journal of Agricultural Economics 78(1996):1130–31.CrossRefGoogle Scholar
McCance, R.A., and Widdowson, E.M.. The Composition of Foods, 5th ed. Cambridge, UK: Royal Society of Chemistry and Ministry of Agriculture, Fisheries and Food, 1991.Google Scholar
Moschini, G., and Meilke, K.D.. “Modeling the Pattern of Structural Change in U.S. Meat Demand.” American Journal of Agricultural Economics 71(1989):251–61.CrossRefGoogle Scholar
Moschini, G., and Moro, D.. “Autocorrelation Specification in Singular Equation Systems.” Economic Letters 46(1994):303–09.CrossRefGoogle Scholar
Nerlove, M. “Spectral Analysis of Seasonal Adjustment Procedures.” Econometrica 32(1964):241–86.CrossRefGoogle Scholar
Park, H., and Thurman, W.N.. “On Interpreting Inverse Demand Systems: A Primal Comparison of Scale Flexibilities and Income Elasticities.” American Journal of Agricultural Economics 81(1999):950–58.CrossRefGoogle Scholar
Park, Y.K., and Yetley, E.A.. “Trend Changes in Use and Current Intakes of Tropical Oils in the United States.” American Journal of Clinical Nutrition 51(1990):738–48.CrossRefGoogle ScholarPubMed
Putnam, J.J., and Allshouse, J.E.. “Food Consumption, Prices, and Expenditures: 1970-97.” USDA, Economic Research Service, Statistical Bulletin 965, April 1999.Google Scholar
Terasvirta, T. “Specification, Estimation, and Evaluation of Smooth Transition Autoregressive Models.” Journal of the American Statistical Association 89(1994):208–18.Google Scholar
Tsurumi, H., Wago, H., and Ilmakunnas, P.. “Gradual Switching Multivariate Regression Models with Stochastic Cross-Equational Constraints and an Application to the KLEM Translog Production Model.” Journal of Econometrics 31(1986):235–53.CrossRefGoogle Scholar
Yen, S.T., and W.S., Chern. “Flexible Demand Systems with Serially Correlated Errors: Fats and Oils Consumption in the United States.” American Journal of Agricultural Economics 74(1992):689–97.CrossRefGoogle Scholar