Agricultural
assistance/
infrastructure
Road density, expenditure on farm to market roads, expenditure
on irrigation, cost of fertilizer policy variables (Secondary data)
1
In the case of this study, agriculture production is potentially endogenous in explaining food consumption.
1
The first stage equation includes dummy for time (quarter) to control for the pooled time-series.
The variables in Table 4 will be the initial set of variables in estimating the models as discussed in the
following model scenarios.
Model scenarios
Consider the following model
ππππ ππππππ, ββ βπππ πβπππππ‘ππππ π‘πππ ,
πππππ π π‘π ππππππ‘πππ πβππππππ ,
food security = π
+π’
βππ’π πβπππ ππ€ππππππ, πππ β ππππππ’ππ‘π’πππ ππ π ππ‘π ,
πππππ’πππππ‘πππ πππππ,
(βππ’π πβπππ π‘ππππ ππππ‘, π πππππ πππππ, π πππππ ππππ‘πππ‘πππ)
(1)
[ππππππ‘πππππ¦: ππππππππ, π πππ ππππππ‘π¦,
π£ππππ‘ππππ‘π¦, π‘πππππππ‘π’ππ],
agri income = π
+π£
ππππ ππ π ππ‘π , ππππ ππ π ππ π‘πποΏ½οΏ½π ππ
ππππππ π‘ππ’ππ‘π’ππ, ππ‘π. ,
[π πππππ π π‘πππ π£ππππππππ ]
(
)
(2)
where the dependent variable has finite mean and the explanatory variables can be continuous or categorical.
By assumption, the error terms u and v have zero mean and zero correlation with any of the explanatory
variables.
In the event that at least one of the explanatory variables, say agricultural productivity, is correlated with
the error term, estimates for the coefficients of the independent variables can be inconsistent2.
Instrumental variables (IV) method addresses this by introducing observable variable that is uncorrelated
with the error term but partially correlated with the endogenous variable.
Similar to FAO study of Karfakis, et al. (201), modeling using FIES dataset will work around the twostage least squares (2SLS) method in estimating the coefficients of the following model as analog to
equation (1).
2
In the case of this study, agriculture production is potentially endogenous in explaining food consumption.
CBMS-FAO | 23
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