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Food Safety and Spinach Demand: A Generalized Error Correction Model

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  • Arnade, Carlos
  • Kuchler, Fred
  • Calvin, Linda

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.

Suggested Citation

  • Arnade, Carlos & Kuchler, Fred & Calvin, Linda, 2011. "Food Safety and Spinach Demand: A Generalized Error Correction Model," Agricultural and Resource Economics Review, Cambridge University Press, vol. 40(2), pages 251-265, September.
    • Handle: RePEc:cup:agrerw:v:40:y:2011:i:02:p:251-265_00
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    References listed on IDEAS

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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
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    6. Frank Asche & Kjell G. Salvanes, 1996. "Dynamic Factor Demand Systems and the Adjustment Speed towards Equilibrium," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 576-581, April.
    7. Calvin, Linda, 2007. "Outbreak Linked to Spinach Forces Reassessment of Food Safety Practices," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-8, June.
    8. Kelvin Balcombe & George Rapsomanikis, 2008. "Bayesian Estimation and Selection of Nonlinear Vector Error Correction Models: The Case of the Sugar-Ethanol-Oil Nexus in Brazil," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 658-668.
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    Cited by:

    1. Hatzenbuehler, Patrick L. & Abbott, Philip C. & Foster, Kenneth A., 2016. "Agricultural Commodity Prices and Exchange Rates under Structural Change," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.
    2. Page, Elina Tselepidakis, 2018. "Trends in Food Recalls: 2004-13," Economic Information Bulletin 276244, United States Department of Agriculture, Economic Research Service.
    3. Samantha L. Durborow & Chanjin Chung & Seon‐woong Kim, 2017. "Implications of the 2006 E. coli outbreak on spatial price transmission in the U.S. fresh spinach market," Agribusiness, John Wiley & Sons, Ltd., vol. 33(4), pages 475-492, September.
    4. Tselepidakis, Elina, 2015. "Food Safety and the Demand for Leafy Greens," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205583, Agricultural and Applied Economics Association.

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