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Abstract

The U.S. is one of the world’s major producers and importers of nuts, with 9% average increase in imports in the last decade (1996-2016). Given that nuts account for, on average, 18% of the U.S. total imports of fruits, it is important to empirically analyze and better understand the U.S. demand for nuts. This study estimates import elasticities of demand using an Almost Ideal Demand System (AIDS) and quarterly data reported by the USCIS for the period of 1996-2016. The parameter estimates of the AIDS model were employed to estimate the elasticities of demand for coconuts, brazil nuts, cashews, almonds, hazelnuts, walnuts, chestnuts, and pistachios. Other nuts as pecans and peanuts are included in the category “other”. Additional adjustments were made to the empirical model in order to account for seasonality and trend, as well as to provide necessary remedies for serial correlation and endogeneity. Our results revealed that all Marshallian own-price elasticities had the expected negative signs and in absolute terms were greater than one indicating that the U.S. demand for these nuts was price-elastic for the period analyzed. The Hicksian cross-price elasticities indicated both complementary relationships and substitutability between the selected nut types.

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