Linkage Between Production and Consumption of an Agricultural Household

The importance of modeling farm households in LDC's as being both producers and consumers of the same good has been recognized for some time. Using a Cobb-Douglas specification for the production function and a linear expenditure system, the paper presents empirical evidence of the linkage between the consumption and production decisions of the agricultural household in Bangladesh. In addition, the study finds that the government price support policy for rice results in higher real wages and hence benefits the landless labor.