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.
|Name||Economics Discussion Papers|