U.S. Sweetener Demand Analysis: A QUAIDS Model Application

Abstract

We estimate the expenditure, price, and Engel parameters for the major U.S. caloric sweeteners (sugar, high-fructose corn syrup [HFCS], and glucose), for the 1975Ð2013 period using the quadratic almost ideal demand system (QUAIDS). The estimated parameters are then used to compute expenditure elasticities and both uncompensated and compensated price elasticities. We find that consumer expenditures are positively elastic for both sugar and HFCS but not for glucose. The own-price elasticity of demand for sugar is less elastic compared to those of HFCS and glucose. Our results will help design an effective U.S. sweetener tax policy.

Keywords

• endogeneity
• glucose
• high fructose corn syrup
• negative semi-definiteness
• separability
• slutsky matrix
• sugar