An Empirical Analysis of Pre-Determined Food Demand in Russia

The Exact Affine Stone Index (EASI) model of Lewbel and Pendakur (2009) offers distinct advantages over its predecessor models, however it does not account for a widely observed phenomenon of pre-committed demand. This may lead to biased elasticity estimates when such pre-commitments are present. This study offers a methodological solution by deriving the generalized EASI (GEASI) model, which incorporates pre-committed quantities into the consumer demand structure. The empirical advantage of the GEASI model is illustrated through its application to the analysis of food demand structure in Russia based on novel provincial-level panel data on household food expenditures over 2007-2014. The results provide strong empirical evidence for the presence of pre-committed demand for key food commodities such as cereals, eggs, and fats/oils. Further comparative analysis highlights the significance of pre-commitment bias in the context of food demand in Russia and illustrates the effectiveness of the GEASI approach in addressing it. The findings extend the empirical literature on food demand in Russia by presenting estimated elasticities that account for potential pre-commitments as well as for unobserved provincial heterogeneity.

Issue Date:
Jan 16 2018
Publication Type:
Conference Paper/ Presentation
Record Identifier:
Total Pages:
JEL Codes:
D11, D12

 Record created 2018-01-17, last modified 2018-01-22

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