Effect of Income Inequality on Demand for Grain Import in Iran

Authors
A. Shahabadi
M. Nemati
H. Samari
Department of Agricultural Economics, Faculty of Agriculture, Bu-Ali Sina University, Hamedan, Islamic Republic of Iran.
Abstract
Among the food products, grains play an important role in the consumption patterns of people, especially in the developing countries. Since Iran's main source of public dietary energy comes directly from grains, investigating and identifying the determinants of import of these products can be an important step towards food security. Most experimental studies consider import of grains as only a function of relative prices and real income, whereas, income inequality is also a variable affecting the import of grains. The present study evaluates the effect of income inequality on the import of grains in Iran's economy during the years 1969-2009. For this purpose, the relationship of grain import with gross domestic production (GDP), grain production, real exchange rate, and income inequality was evaluated for Iran by using the Vector Error Correction Model (VECM). The results indicate that the relationship between income inequality and grain import is positive and its coefficient is +0.55%. This implies that 1% increase in income inequality increases grain import by 0.55%. Also, the effect of gross domestic production on grains import is positive and the real exchange rate and grains production variables have a negative and significant effect on grains import.

Keywords

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Journal of Agricultural Science and Technology
Volume 17, Issue 5
September and October 2015
Pages 1085-1093