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Food Safety and Spinach Demand: A Generalized Error Correction Model

Published online by Cambridge University Press:  15 September 2016

Carlos Arnade ,
Fred Kuchler  and
Linda Calvin
Carlos Arnade
Affiliation:
Economic Research Service, U.S. Department of Agriculture, in Washington, D.C.
Fred Kuchler
Affiliation:
Economic Research Service, U.S. Department of Agriculture, in Washington, D.C.
Linda Calvin
Affiliation:
Economic Research Service, U.S. Department of Agriculture, in Washington, D.C.
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Abstract

We estimate an error correction model representing demand for leafy green vegetables but generalize the structure to allow for adjustment to one conspicuous shock. We investigate whether the adjustment rate to the U.S. Food and Drug Administration's (FDA) 2006 warning that fresh spinach was contaminated with deadly bacteria was distinct from the overall adjustment rate. Our model allows consumers to correct both for past errors and for any errors in their reaction to the shock. This method yields an estimate of the adjustment rate to the policy shock and points to an improved estimate of the duration of policy impacts.

Keywords

error correction modeladjustment ratesAIDS demand modelretail food demand
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 40 , Issue 2 , August 2011 , pp. 251 - 265
Copyright
Copyright © 2011 Northeastern Agricultural and Resource Economics Association 

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