Curvature in Slutsky Matrix: Estimates from Rural India.
The motivation in this paper is to understand the nutritional impact of food price changes with large numbers suffering protein-calorie deficiency. In India, it has been reported that during the 1990s cereal consumption declined while non-cereal consumption increased. Whether this shift in consumption is a result of changes in relative prices is the focus of this analysis. In this paper we work with four food groups: wheat, rice, pulses and milk. The coefficients on income for all substitution elasticites except the one of rice with milk are significant. In all cases except milk with respect to other commodities these are positive as well. Thus with a rise in income households are better able to substitute all commodities except milk with other commodities. On the other hand, the substitution elasticity of milk with respect to other commodities drops with income.