Structural Change in the Demand for Meat

Abstract

Economists have long thought that shocks in the economy sometimes lead to permanent changes in behavioral relationships. Hence, supply or demand elasticities estimated from econometric models may change over time. The source of such structural change may be technological adoption, a shift in consumer preferences, or an institutional change. One way to handle this problem in linear models is to allow the parameters to change as the situation changes so that the model provides a local approximation of the behavioral relationship. This approach is an attractive way to deal with structural change problems. Econometricians have extended the classical