HOME » wiiw Research Reports » Why Is Food Cheaper in Rich (European) Countries?
Relative to non-food items, food tends to be cheaper in rich, as compared with poor European countries. This tendency cannot be explained in terms of cost developments or foreign-trade considerations. A positive explanation proposed focuses on demand-income-supply interaction. An analysis of a cross-country price-augmented modification of Engel's Law, econometrically specified, indicates that the relative price of food is related positively to the supply of food items and negatively to that of non-food items. This finding is consistent with ¿agricultural price scissors' and also casts a different light on the nature of economic development and structural change.
wiiw Research Reports
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Why Is Food Cheaper in Rich (European) Countries? (by Leon Podkaminer) wiiw Research Report No. 322, October 2005 31 pages including 2 Tables and 6 Figures FREE DOWNLOAD
Keywords: relative prices, structural change, cross-country demand functions, demand for food JEL classification: O14, D12, D51 Countries covered: European Union Topics: International Trade, Competitiveness and FDI, Macroeconomic Analysis and Policy, Sectoral studies |
Add to cartRelative to non-food items, food tends to be cheaper in rich, as compared with poor European countries. This tendency cannot be explained in terms of cost developments or foreign-trade considerations. A positive explanation proposed focuses on demand-income-supply interaction. An analysis of a cross-country price-augmented modification of Engel's Law, econometrically specified, indicates that the relative price of food is related positively to the supply of food items and negatively to that of non-food items. This finding is consistent with ¿agricultural price scissors' and also casts a different light on the nature of economic development and structural change.
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