The Impact of Rising Food Prices in Tajikistan: Evidence from Estimations of Food Demand Systems

Abstract

This PhD dissertation aims to examine household consumption patterns in Tajikistan and their response to changes in food prices and other factors. The research is carried out through estimations of the food demand system. Chapter 1 briefly describes the socio-economic situation in Tajikistan over the period of independence since 1991, considering the transition of the Tajik economy from central planning to a market-based system, and describing its socio-economic reforms and challenges, in particular those related to agriculture and the rural areas. Chapter 2 investigates the extent and speed of price transmission from international to local food markets, using vector error correction models (VEC) and threshold co-integration models to analyse the price transmission mechanism. The results are interpreted in the context of the discussion on effects of agricultural and trade policies on food security in Tajikistan. Chapter 3 estimates a Quadratic Almost Ideal Demand System (QUAIDS) model of the food demand system for Tajikistan using the microdata from Tajikistan Living Standard Measurement Survey (LSMS) of 2003, 2007 and 2009, for seven aggregate food products. The estimation employs the two-step approach of Shonkwiler and Yen, (1999), to account for zero values in consumption expenditure. The results provides precise information about household food consumption behavior taking into account the effects of the various socio-economic characteristics on which the Tajik households are heterogeneous. Finally, Chapter 4 analyses the seasonal food consumption pattern of Tajik households using a complete demand system based on quarterly data from the Household Budget Survey of Tajikistan of 2013-2014. The main contribution of this chapter is the use of household longitudinal data and a QUAIDS model to take into account both yearly and seasonal food consumption behaviour on the part of the Tajik households.