Advances in Consumer Research
Issue 2 : 1376-1392
Original Article
A Time-Series Analysis of the Impact of Price and Income Changes on Wheat and Rice Consumption in Iraq (1990–2024)
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1
Tikrit University, College of Agriculture, Iraq
2
Samaraa University, College of Agriculture, Iraq
Abstract

Consumption of basic food commodities, particularly wheat and rice, is a key indicator of food security and economic welfare in developing countries. During the period 1990–2024, Iraq experienced significant fluctuations in domestic and global cereal prices, continuous changes in real individual income, high inflation rates, and exchange rate volatility, directly impacting consumer behavior (FAO, 2023:18; Central Statistical Organization, 2024:11). This study analyzes the econometric relationship between wheat and rice consumption and macroeconomic determinants, namely prices, individual income, inflation, and exchange rates, using the Autoregressive Distributed Lag (ARDL) methodology developed by Pesaran et al. (2001:289), which allows for simultaneous analysis of short- and long-term relationships within time series data. Annual data for 1990–2024 were sourced from the Central Statistical Organization, the FAO, and the World Bank. Unit root tests (ADF and PP) were conducted to check variable stationarity, followed by Bounds Tests to assess cointegration, and an Error Correction Model (ECM) to determine the speed of adjustment following short-term shocks. The results show a long-term equilibrium relationship among the variables, with prices being the most influential factor in wheat and rice consumption; price increases significantly reduce consumption. A clear substitution effect between wheat and rice is observed, where increases in the price of one commodity raise the consumption of the other (FAO, 2023:22). Real individual income positively affects consumption but to a limited extent, reflecting the necessity and low-income elasticity of these food commodities. The ECM results indicate adjustment speeds of -0.1325 for rice and -0.74 for wheat, confirming that the economic system returns to equilibrium relatively quickly after shocks. Diagnostic tests confirmed the absence of econometric problems, and CUSUM and CUSUMSQ tests verified the stability of model coefficients over time. The study recommends stabilizing basic food prices, promoting domestic production to mitigate exchange rate effects, enhancing food support programs for low-income households, and updating consumption and income databases to support informed policy-making in sustainable food security.

 

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