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Togolese cereal demand: An application of linear expenditure, Rotterdam and almost ideal demand systems
Abstract
The objective of this research is to study the structure of Togolese demand for cereals. Using modern techniques of demand estimation, the study focuses on estimates of elasticities of demand for corn, millet, rice and sorghum. The first of its kind for Togo, this research is aimed at three groups: model builders, Ministry of Agriculture, and international donors and organizations. Three models are used for analysis: the Linear Expenditure System, the Rotterdam model, and the Almost Ideal Demand System. Zellner's seemingly unrelated regression procedure was used with homogeneity and symmetry restrictions imposed while not violating adding up condition. The choice between the three models was based upon an intuitive inference, that rice is the more income elastic among cereals consumed in the country. Such belief should be observed through a higher income elasticity for rice. Results do not provide evidence. Based on income elasticity results, corn has the highest elasticity estimate in all three models. This means that, for Togolese, when there is an opportunity of an increase of income, the increase in demand goes, first, to corn. Linear Expenditure System and Almost Ideal Demand System do not show positive relationship between rice and other cereals. Only the Rotterdam model gives this relationship between rice on the one hand and millet and sorghum on the other. However, elasticity estimates show that an increase in the price of rice has higher effect on the consumption of millet and sorghum than the effect of an increase of the price of millet or sorghum on the demand for rice. Rice is not, therefore, the more income elastic commodity in Togolese cereal demand, according to this study. Other researches based on surveys are necessary to better understand the issue. Even though the Rotterdam model seems to respond better to the criteria of selection, because of its substitution effects between rice and millet and sorghum, it fails to satisfy the second criterium of highest income elasticity for rice. So, there is no single model that explains a complete Togolese expenditure behavior according to our hypotheses.
Subject Area
Agricultural economics
Recommended Citation
Takpara, Khoura, "Togolese cereal demand: An application of linear expenditure, Rotterdam and almost ideal demand systems" (1999). ETD collection for University of Nebraska-Lincoln. AAI9942157.
https://digitalcommons.unl.edu/dissertations/AAI9942157