Household food demand in Turkey: A two-step demand system approach

•A large food demand system is estimated using household survey data from Turkey.•Zero observations are accommodated with a two-step estimation procedure.•Standard errors of parameter estimates and elasticities are derived with bootstraps.•Gross complements and substitutes are found but net substitution is more obvious.•Elasticities and demographic effects can inform policy deliberations. Demands for sixteen food products are investigated, using data from the Turkish Household Expenditure Survey. The linear approximate almost ideal demand system (LAIDS) is estimated with Shonkwiler and Yen’s two-step procedure. All own-price elasticities are negative and expenditure elasticities positive. Bread, other cereals, bovine, mutton, giblets, and cheese have high expenditure elasticities. Mutton, bovine, and several other protein-rich products are price elastic. Results suggest a mix of gross substitutes and complements, while net substitution is the dominant pattern. Demographic characteristics also play important roles in shaping food demand. The elasticity estimates can inform policy deliberations.