ECONOMICS WORLD FOOD DEMAND by Grace

Food occupies a role of particular importance in the consumer’s budget, especially in poor countries. This paper deals with special issues arising from modelling food consumption patterns in 138 countries, where per capita incomes differ by as much as a factor of 100. We explore various forms of the Engel curve, and emphasise the economic behaviour of the income elasticity and the [0, 1] domain of the budget share. Using a new functional form to allow for the substantial variation in prices across countries, we provide estimates of income and price elasticities in each country. Stress testing is also employed by considering the implications of extreme values of income. *This research was supported in part by an International Postgraduate Research Scholarship at UWA. I would like to acknowledge Ken Clements for supervision. Earlier versions of this paper were presented at a seminar at UWA, the ANU/UWA PhD conference in Economics and Business, and at the UNSW Economic Measurement Workshop; I thank participants for their comments and suggestions. In revising the paper, I have benefited from advice from Keith McLaren and Arnold Zellner. My thanks also go to Mei-Hsiu Chen, Yihui Lan and Jiawei Si for their helpful comments. Errors and omissions are my own.