Modeling the Effect of Economic Sanctions on the Demand for Meat Consumption Basket of Urban Households

Authors
Elham Vafaei 1
Mohammad Rezvani 2
Mahdi Pendar 2
1 The Center for Development Research and Foresight
2 University of Tehran
Abstract
Due to the position of meat products in the food pyramid and its importance in maintaining people's health and that economic sanctions can have a significant effect on meat consumption through the channel of increasing production costs and increasing the price of meat, the purpose of this research is to investigate the existence of failure There is a structure in the preferences of the meat consumption basket of urban households using the parametric approach and the switching regression framework developed by Ohtani and Katayama (1986) in the period of 2001-2013. The results show a structural failure (change) in preferences suddenly in 2017 and after the withdrawal of the United States from the JCPOA. The results show that after the withdrawal of the United States from the JCPOA, the price of chicken meat has decreased and the price of fish has increased, so that chicken meat has changed from an attractive product to an inelastic product. This result shows that consumers have become dependent on chicken meat and are willing to pay more to buy it. In such a situation, it is important to have adequate and optimal monitoring of the price of chicken meat, because people are forced to pay any price for chicken meat, and the changes of this product can cause the consumption basket of urban households to fluctuate greatly. Also, the estimation of income elasticity shows that chicken meat has changed from a necessary commodity to a luxury commodity after the sanctions. Therefore, to support consumers, it will be the right decision to use income tools and policies that lead to increasing the liquidity of urban households.
Keywords
Sanctions
Failure
switching regression
Quadratic almost ideal demand system
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