Investigation the possibility of Aggregation fruits and nuts, vegetables, Beans and vegetable products: Using Generalized Composite Commodity Theorem (GCCT)

Document Type : Research Article

Authors

• M. Shabanzadeh ¹
• A. Mahmoodi ²

¹ Agricultural Economics, Faculty of Agriculture, University of Tehran, Iran

² Payam Noor

https://doi.org/10.22067/jead2.v29i4.43205

Abstract

Introduction: Fruit and nuts, all kinds of vegetables, legumes and vegetable products, including commodity baskets with high proportion of nutritive value, are of great importance for policymakers of the agricultural sector. Therefore, the study of the conditions and factors affecting the demand for these goods can be predisposing advice to control the market and other factors affecting their use. But when it comes to the country at macro level of household demand, the aggregate commodity group beomes important. In cases where it is necessary to apply the fruits or vegetables as a function of household aggregation of a group of goods to be estimated, it is necessary a group of products with the scientific method to get aggregate and form a group variable as fruits or vegetables are included in the econometric model. Therefore, due to problems such as lack of access to information on each product separately, the high cost of collecting the data, missing observations, multicollinearity problem and limited degrees of freedom, we have to use grouping and composite commodities. But it is important that the correct grouping and consistent is made because of incorrect Aggregation, as specified in the error term appears on demand system estimated and Lead to biased estimation of the values of parameters and elasticity's, Which results in an incorrect picture of consumer behavior. Study of composite conditions of Agricultural commodities, as an important topic in economics, had been considered. Because mostly, access to disaggregate of the goods is not possible, and other problems such as multicollinearity occurs by examining the separation in the econometrics model. Study of composite conditions of Agricultural commodities, as an important topic in economics, had been considered. Due to its importance in the study, condition of Aggregation fruit and nuts, all kinds of vegetables and Bean (legumes) are using Generalized Composite Commodity Theorem (GCCT) is investigated.
Materials and Methods: Many efforts have been made by Economists to the necessary conditions for the validity of the Aggregation submitted. The first step was taken by Hicks with proposing a theory of composite commodities. Based on this theory, the goods can be placed in a group and form a single product, they must be equal to the ratio of their prices change over time. In other words, relative prices remain constant. Separability in production and Consumption theory, respectively by Leon Leontief and Sano also attempt to provide the necessary conditions have been aggregation among the goods. Based on this theory, inputs can be in a group that Marginal rate of substitution (MRS) between each pair of these inputs in a group independent from a separate group from the group. Blackorby and colleagues show that the dual condition of the license is limited to the aggregation of the products it provides. Lewbel (1996), the third method called generalized composite commodities theory (GCCT) is provided. Unlike the theory of Separability, do not apply any restrictions on the production technology, and it was for this reason that Lewbel was named the aggregation without separability. According to Lewbel theory, all products which those relative price index is independent group's index, can be classified in a group.Information needed as monthly statistics were collected from the central bank for the period 1383-1391.
Results and Discussion: The results of this study indicates that fruit and nuts, with respect to meeting the test requirements GCCT, fruit trees, cucurbit fruits and dried fruit can be considered as three aggregate groups; And furthermore, these three groups can be aggregated as a fruit and dried fruit group. Also Leaf vegetables, vegetables shrub, and bean (legumes) can be considered as aggregate of four groups, can be considered as four aggregate groups; furthermore, these four groups can be aggregate as a fruit ans dried fruit group; In addition with two kinds of fresh vegetables and vegetable products As a composite group can be considered.
Conclusion: Therefore economic studies have been conducted by using grouping by the Central Bank can be performed, using these Aggregated indices, and the results can be reliable and valid.

Keywords

• Beans
• Generalized Composite Commodity Theorem
• Fruit and Nuts
• Vegetables

20.1001.1.20084722.1394.29.4.2.6

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