Trade, Tastes and Nutrition in India

This paper introduces habit formation into an otherwise standard model of international trade. The liberalization of internal agriculture trade in India will generate short-run caloric losses unless income gains from trade are relatively large, and that there would be no such losses if tastes were identical across the country. The consumption patterns of inter-state migrants are examined, and .it is found that they consume fewer calories for a given level of food spending than otherwise similar consumers. This effect only disappears two generations after migration, as tastes adjust to local prices. These findings, which reflect the higher prices of preferred origin-state goods in the migrant’s destination state, further corroborate the assumptions of my model. [CGD}.