Price and income elasticity of demand for food in Iran: a dynamic demand system

    The demand for food is estimated within a system framework. The seperability structure of the model is checked by a parametric test. The almost ideal demand system is estimated by seemingly unrelated regression in the static and dynamic version based on the time series data for 1974-2003 in Iran. The results of various specification and misspecification tests suggest that the static version performs poorly as compared with the dynamic version.   The results of seperability structure rejected hypothesis saying consumers first allocate their income among different food groups and then within subgroup of meat. The compensated and un-compensated own-price elasticity is negative and the income elasticity is positive.