Demand elasticities for food products in Brazil: a two-stage budgeting system

Abstract

The object of this article is to estimate demand elasticities for a basket of staple food important for providing the caloric needs of Brazilian households. These elasticities are useful in the measurement of the impact of structural reforms on poverty. A two-stage demand system was constructed, based on data from Household Expenditure Surveys (POF) produced by IBGE (The Brazilian Bureau of Statistics) in 1987/88 and 1995/96. We have used panel data to estimate the model, and have calculated income, own-price, and cross-price elasticities for eight groups of goods and services and, in the second stage, for 11 sub groups of staple food products. We estimated those elasticities for the whole sample of consumers and for two income groups.