Income and price affect chickpea trade expenditure and consumption expenditure share respectively. An empirical model was estimated to examine the trade effect through the expenditure channel using Almost Ideal Demand System and thus considering non-homotheticity in preferences. The results of the analysis indicated that global chickpea trade has increased from 100000 metric tons in 1988 to about 2.5 million metric tons in 2015. Between the same period consumption and production of chickpea had an increasing trend. USA and Canada had become part of the top 10 chickpea producers by 2015 signifying the increasing demand of chickpea in western countries. Factors that affected relative chickpea trade to importers income were relative market size of the exporter, bilateral distance and contiguous borders. Also, a percentage increase in the adjusted mean income of chickpea consuming country will lead to 94% decrease in the consumption of chickpea when country pair effects are considered.

The improper aggregation of commodities can have important consequences when estimating a system of group demand equations. Generally, aggregates are created under the assumptions that intra-group preferences are homothetic and the consumer's utility function is weakly separable over some partition. These assumptions place severe restrictions on the model that can significantly impact parameter and elasticity estimates. An alternative to imposing weak separability is to employ the Generalized Composite Commodity Theorem, which requires the relative intra-group commodity prices to be independent of the group price index. This study compares the results of estimating a demand system for composite beef, pork, and poultry products under the assumptions of weak separability and the Generalized Composite Commodity Theorem. Another important issue related to aggregation is the specification of an appropriate group price index. Price indices consistent with linear homogeneous preferences (a subset of the homothetic class of preferences) and non-homothetic intra-group preferences are identified and it is shown that several of the commonly employed indices are biased in the absence of complete price data. / Master of Science