Estimation of meat demand system in Jordan: an almost ideal demand system

Abstract

AbstractThis paper reports the results of the estimation of a linear approximate almost ideal demand system for Jordan meat demand using cross‐sectional data collected by the Department of Statistics in Jordan as part of the household expenditure survey. A censored regression method for the system of equation is used to analyse the meat consumption patterns. This method allows for inclusion of a large number of zero consumption for some foods. Two‐step demand system was estimated. In the first stage, Inverse Mill Ratio is estimated by using probit regression model. In the second stage, the estimated variable is included in the AIDS model to estimate food demand elasticities. The objective of this work is to provide econometric estimates of the different types of demand elasticities for meats in Jordan. To be consistent with the demand theory, the homogeneity, symmetry and adding up restrictions were satisfied in the estimated models. The estimated model was used to obtain estimates of Hicksian, Marshallian and expenditure demand elasticities for meats in Jordan. The results revealed that the demand for mutton and poultry is elastic while the demand for beef and fish is inelastic. The cross‐price elasticities indicate that poultry and beef are substitutes to mutton. The expenditure elasticities confirm that beef and mutton are luxury goods while poultry and fish are necessity goods.