Household Demand in Rural China: A Two-Stage LES-AIDS Model

Shenggen Fan, Eric J. Wailes and Gail Cramer

American Journal of Agricultural Economics, 1995, vol. 77, issue 1, 54-62

Abstract: A complete demand system of Chinese rural households is estimated using a two-stage LES-AIDS model and pooled provincial and time-series data from 1982 to 1990. For commodity groups (food, clothing, fuel, housing, and other commodities), demand is price-inelastic. Housing and other commodities are luxury goods, while clothing and food are necessities. Within the food group, price elasticities range from −0.005 to −0.63. Expenditure elasticities are lower for grains and higher for meat, tobacco, and alcohol. The results imply a gap between food demand and supply growth. Therefore, China will face pressure to import food.

Date: 1995
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