Household demand in rural China: a two-stage LES-AIDS model

• Published in: American journal of agricultural economics 1995-02, Vol.77 (1), p.54-62
• Main Authors: Fan, Shenggen, Wailes, Eric J., Cramer, Gail L.
• Format: Article
• Language: English
• Subjects: Agricultural commodities; Agricultural economics; Agricultural production; Agriculture; AIDS model; ANALISIS DE SERIES CRONOLOGICAS; ANALYSE DE SERIES CHRONOLOGIQUES; Budgeting; CHINA; CHINE; Chinese rural households; Commodities; Commodity prices; CONSOMMATION DES MENAGES; Consumer behavior; Consumer demand; CONSUMO FAMILIAR; D120; DEMANDA; DEMANDE; Economic reform; ELASTICIDAD DE LOS PRECIOS; ELASTICITE DES PRIX; Elasticity of demand; ENCUESTAS; ENQUETE; Expenditures; Food; Food demand; Food economics; Grains; HOGARES; household demand; Households; Housing; Housing demand; International trade; LES model; Meats; MENAGE; MODELE ECONOMETRIQUE; MODELOS ECONOMETRICOS; O180; PAUTAS ALIMENTARIAS; Price elasticity; Productivity; R220; Rice; Rural areas; Rural economics; SCHEMA ALIMENTAIRE; two-stage budgeting; US exports; Utility functions; ZONAS RURALES; ZONE RURALE
• ISSN: 0002-9092; 1467-8276
• DOI: 10.2307/1243888

A complete demand system of Chinese rural households is estimated using a two-stage LES-AIDS model and pooled provincial and time-series data from 1982 to 1990. For commodity groups (food, clothing, fuel, housing, and other commodities, demand is price-inelastic. Housing and other commodities are luxury goods, while clothing and food are necessities. Within the food group, price elasticities range from -0.005 to -0.63. Expenditure elasticities are lower for grains and higher for meat, tobacco, and alcohol. The results imply a gap between food demand and supply growth. Therefore, China will face pressure to import food