Analysing Consumption Patterns and Food Demand in BRICS Countries: A Differential Approach to Demand Theory and Policy Analysis

Mungase, Sachin and Kothe, Satyanarayan (2024): Analysing Consumption Patterns and Food Demand in BRICS Countries: A Differential Approach to Demand Theory and Policy Analysis.

Abstract

The study explores the application of demand theory in studying consumer spending behaviour and policy analysis, with a focus on food demand and consumption patterns. It reviews various demand function systems and introduces the differential approach as a superior method for modelling demand. The study uses recent phases of the International Comparison Program (ICP) to analyse consumption patterns in Brazil, China, India, Russia, and South Africa. The methodology involves a two-step budgeting process, and the data are collected from three ICP phases for BRICS countries. In the second stage of budgeting, food subcategories and broad categories are analysed using a new version of the CBS level demand system models, originally developed by Keller and Van Driel in 1985 and later modified by Tayebi in 2019. These models, known as differential systems of consumer demand, are based on differential equations of consumer goods’ budget shares. The study presents empirical findings for broad consumption and food subcategories using pooled data from BRICS countries. It uses Tayebi's CBS-PI levels and CBS levels models to estimate results for nine broad consumption groups and food subgroups. The study finds that lower income countries are more responsive to income and price changes. The results show that both the CBS-PI levels and CBS levels models work well for BRICS countries. Spending on necessities like food and non-alcoholic drinks is significant in BRICS countries, while countries with a high real per capita income spend more on alcoholic beverages, tobacco, and narcotics. As income increases, so does demand for services. The study highlights the application of the differential approach to the analysis of consumption patterns between nations. It emphasizes the significance of demand-side influences on the long-term economic structure. The findings could be beneficial for future research and policy-making, particularly in developing countries as they balance economic growth with food security.

• Item Type: MPRA Paper
• Language: English
• Keywords: Demand theory, Differential approach, CBS level demand system models, BRICS countries
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth

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