The objective of this study is to analyze the behavior of the Brazilian demand for rough and milled rice between January 1995 and June 2010. The main aim is to test the adequacy of linear and non-linear relations that represent short and long-term variables on the demand. In general, long-term impacts from income and domestic price were the most determinants to imports and the rice can be seen as an inferior good. The price of imports contributes less than proportionately, while the importer seems to adjust the quantity with some lag. The correction of the model to short-term shocks was eased in monthly non-linear estimates, while it remained nearly stable in quarterly estimates. Finally, one can say that import cycles were strongly related to adverse climatic events, as well as to alterations in trade policy. The results draw attention to the influence of the government on the imports through pricing incentives to third parties - what proves to be helpful to overcome supply shortages in Brazil and Mercosur.
Cointegration; error correction model; switching regime; demand function
