Investigation of asymmetric impulse responses between average consumption propensity and average food consumption propensity of household in Korea

Average consumption propensity (ACP) and average food consumption propensity (AFCP) are important indices for implementing macroeconomic and food policies. The present paper investigates the existence of asymmetric responses of ACP and AFCP to positive and negative shocks of each series in Korea. According to the estimation results of the Structural Vector Autoregression (SVAR) model, ACP and AFCP are analysed to have asymmetric responses to negative and positive shocks, regardless of whether the shock is imposed on the own or on the other series. The derived absolute values of the responses indicate that ACP is more influenced by AFCP, which implies that a shock on AFCP is more permanent than one on ACP. The responses of ACP and AFCP appear to be lower during the period after 1998 when the Asian financial crisis occurred. This implies that not only food consumption, but also overall consumption of households became stabilised after the Asian financial crisis.