north south trade export led growth with abundant labour abstract a north south model is developed in which the south is represented as a neo classical dual economy conditions are imposed which make temporary equilibrium unique and walrasian stable and long run balanced growth paths globally asymptotically stable in the short run an expansion of northern demand for southern products always improves the terms of trade in the long run however an increase in the growth rate of northern demand can turn the terms of trade against the south reduce real wages and lower living standards

taxing food and beverages theory evidence and policy we developed a theoretical framework to examine the effect of a change in sales or excise tax on food and beverage demand after considering that consumers may have imperfect tax knowledge are sometimes inattentive to sales tax may not be informed of a sales tax change and pay no sales tax on eligible food or beverages if using food stamps we conducted simulations to assess how much the sales tax elasticity of demand should be adjusted downward from the price elasticity of demand and quantified the advantage of using an excise tax as an anti obesity policy copyright 2013 oxford university press

demand elasticities for food products in brazil a two stage budgeting system the object of this article is to estimate demand elasticities for a basket of staple food important for providing the caloric needs of brazilian households these elasticities are useful in the measurement of the impact of structural reforms on poverty a two stage demand system was constructed based on data from household expenditure surveys pof produced by ibge the brazilian bureau of statistics in 1987 88 and 1995 96 we have used panel data to estimate the model and have calculated income own price and cross price elasticities for eight groups of goods and services and in the second stage for 11 sub groups of staple food products we estimated those elasticities for the whole sample of consumers and for two income groups

semiparametric estimation and consumer demand this paper considers the implementation of semiparametric methods in the empirical analysis of consumer demand the application is to the estimation of the engel curve relationship and uses the british family expenditure survey household composition is modelled using an extended partially linear framework this is shown to provide a useful method for pooling non parametric engel curves across households of different demographic composition c 1998 john wiley sons ltd

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

tricks with hicks the easi demand system we invent implicit marshallian demands which combine desirable features of hicksian and marshallian demands we propose and estimate the exact affine stone index easi implicit marshallian demand system like the almost ideal demand aid system easi budget shares are linear in parameters given real expenditures however unlike the aid easi demands can have any rank and its engel curves can have any shape over real expenditures easi error terms equal random utility parameters to account for unobserved preference heterogeneity easi demand functions can be estimated using gmm or three stage least squares and like aid an approximate easi model can be estimated by linear regression

welfare analysis and intertemporal substitution abstract this paper explores the structure of welfare comparisons when direct utility is weakly separable over time the lifetime welfare effect of a reform is then the sum of atemporal hicksian variations and intertemporal variations reflecting intertemporal substitution these latter are shown to be of only second order importance in lifetime welfare comparisons approximations to the intertemporal variations when preferences are intertemporally additive are derived pointing to the welfare significance in this context of not only the intertemporal elasticity of substitution but also within period income effects numerical examples illustrate the analysis and suggest possible orders of magnitude

estimating the value and distributional effects of free state schooling the effects of free of charge state education on income distribution are often studied by allocating government education outlays to households assuming that these outlays equal the benefit which households attach to state schooling this paper proposes a demand analysis approach to estimating the true value of state education as perceived by consumers and uses the results to assess the inefficiency of public provision empirical analysis based on data from cyprus suggests that state schooling costs twice the amount households are willing to pay for the implications of this finding for the equality and anti poverty effects of state education are illustrated

the influence of household composition on household expenditure patterns theory and spanish evidence a concept of demographic separability is proposed that formalizes the notion that there are groups of goods adult goods that have little or no relationship to specific classes of household demographics the numbers or ages of children that there exist adult goods demographically separable from children is a necessary but not sufficient condition for the validity of rothbarth s method for measuring child costs we propose two different methods for testing demographic separability and present results from a 1981 survey of spain the econometric evidence is in fair agreement with the theoretical presuppositions

carbon tax simulations using a household demand model abstract the main objective of this paper is to analyse consumer response and welfare effects due to changes in energy or environmental policy to achieve this objective we formulate and estimate an econometric model for non durable consumer demand in sweden that utilises micro and macro data in the simulations we consider two revenue neutral scenarios that both imply a doubling of the co2 tax one that returns the revenues in the form of a lower vat and one that subsidise public transport one conclusion from the simulations is that the co2 tax has regional distribution effects in the sense that household living in sparsely populated areas carry a larger share of the tax burden

equivalent expenditure functions and expenditure dependent equivalence scales abstract this paper presents and investigates a new class of equivalent expenditure functions that is a generalization of the one that corresponds to exact independent of base equivalence scales it provides less restrictive household demands especially for children s goods and has associated equivalence scales that may depend on expenditure we show that under certain conditions equivalent expenditure functions and the associated expenditure dependent equivalence scales can be uniquely estimated from demand data we estimate them using canadian data and find that the resulting scales are both plausible and expenditure dependent the estimated equivalence scales for households with children decline significantly as expenditure increases

a time preference measure of the social discount rate for the uk in this study the social discount rate for the uk is estimated the result compared with the treasury approved rate and the main associated policy implications considered a case is argued for reducing the official discount rate in appraisals involving all long term social projects the estimate of the elasticity of the marginal utility of consumption an important component of the discount rate is supported by plausible and statistically valid regression results the need for further work relating to other major european countries is identified so that discount rate comparisons can be made on a consistent basis

terms of trade and domestic distribution export led growth with abundant labour abstract a general equilibrium macro model is constructed to explore effects of export led growth policies on the terms of trade and the domestic distribution of a developing region with abundant labour this region the south trades with another the north they have different technologies and supplies of factors it is shown that under certain conditions of dualism in the production of goods and of abundant labour supply in the south an increase in the volume of exports from the south may bring about a sustained worsening of the south s terms of trade with the north even if this increase in exports is due to a positive shift in demand from the north this change in the terms of trade is accompanied by a sustained loss of purchasing power of wages within the south these results take place in a walrasian stable market when technologies are more homogenous and labour less abundant the results are reversed increased exports will take place together with improvements in terms of trade and a tendency to equalise factor prices between the regions the results argue for coordination of domestic and international policies with special attention to technologies and labour markets

new estimates of the elasticity of marginal utility for the uk this paper provides novel empirical evidence on the value of the elasticity of marginal utility eta for the united kingdom eta is a crucial component of the social discount rate sdr which determines the inter temporal trade offs that are acceptable to society using contemporaneous and historical data new estimates are obtained using four revealed preference techniques the equal sacrifice income tax approach the euler equation approach the frisch additive preferences approach and risk aversion in insurance markets a meta analysis indicates parameter homogeneity across approaches and a central estimate of 1 5 for eta the confidence interval excludes unity the value used in official guidance by the uk government the term structure of the sdr is then estimated the result is a short run sdr of 4 5 declining to 4 2 in the very long run this is higher and flatter than the uk official guidance the difference stems from incorrect calibration of social welfare and estimation of the diffusion of growth other things equal the results suggest that current uk guidance might need to be updated

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

the engel curve for alcohol and the rank of demand systems this paper shows that the quadratic shape of the engel curve for alcohol is induced by preference heterogeneity between drinkers and abstainers in a japanese data set with controlling the heterogeneity it is shown that the engel curve for alcohol slopes monotonically downwards for drinkers and that the probability of being a drinker is an increasing function of total expenditure these two relationships generate a quadratic shape for the engel curve for alcohol other goods in this data set appear to have nearly linear engel curves so if the alcohol engel curve for drinkers is also linear then after controlling for this preference heterogeneity the rank of this demand system would be two copyright 2006 john wiley sons ltd

best nonparametric bounds on demand responses this paper uses revealed preference inequalities to provide the tightest possible best nonparametric bounds on predicted consumer responses to price changes using consumer level data over a finite set of relative price changes these responses are allowed to vary nonparametrically across the income distribution this is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths engel curves we label these expansion path based bounds on demand responses as e bounds deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterize taste change and to provide a stochastic environment within which violations of revealed preference inequalities can be assessed

equivalence scales in a rank 3 demand system abstract in the context of a rank 3 demand system equivalence scales measuring the cost of demographic characteristics independently of the base utility level can be identified from cross section data without demographic separability restrictions although this can also be achieved with a rank 2 demand system that contains a nonlinear log expenditure term in its budget shares tests performed in a nested framework suggest that the rank 3 demand system approach is empirically superior the informative structure of the rank 3 demand system is used to estimate a detailed pattern of demographic costs including the cost of single parenthood and economies of scale within the family

how serious is the aggregation problem an empirical illustration heterogeneity in consumer behaviour may create problems with aggregation across consumers if so we may not be able to make correct inferences about behaviour based on aggregated data however using micro estimates to predict aggregate demand responses to policy changes may also create a bias if not aggregated properly this may sound like a catch 22 situation but it is not as it is possible to calculate both micro and aggregate demand responses based on microdata the size of the aggregation bias is an empirical question in this article we show how to calculate theoretically consistent aggregate demand responses we use both micro and macro data for norwegian household electricity consumption to illustrate the magnitude and direction of different aggregation biases we find considerable aggregation biases in particular when estimating with macro data

contemporaneous and intertemporal child costs equivalent expenditure vs equivalent income scales abstract parents may provide for their children by drawing on savings or borrowing as well as by reducing current consumption this means that child costs may be partly paid from reducing consumption in periods when the children themselves are not in the family static comparisons of consumption costs between households with and without children are therefore affected by the extent to which parents are willing and able to meet child costs through intertemporal transfers this paper analyses the implications of this argument for the estimation of adult equivalent scales and provides empirical illustrations using individual household data

estimating a demand system with nonnegativity constraints mexican meat demand a new information based approach for estimating systems of many equations with nonnegativity constraints is presented this approach called generalized maximum entropy gme is more practical and

price and income elasticities of residential and industrial electricity demand in the european union this study examines the short and long run price and income elasticities of residential and industrial electricity demand in the european union between 1996 and 2016 instrumental variable models using the between estimator as well as dynamic panel models are employed to present robust estimates and to assess the impact of different methodologies on the reported elasticities the long run price elasticity of residential electricity consumption is estimated between 0 53 and 0 56 these elasticities are more inelastic than that of industrial electricity use which is reported between 0 75 and 1 01 the choice of different econometric methodologies has only moderate impact on the estimates while long run residential income elasticity estimates are moderately inelastic and estimated around 0 61 industrial electricity use tends to be closely tied to income with elasticities between 0 76 and 1 08 electricity demand in all sectors is highly price and income inelastic in the short run additionally population density temperatures and policy measures also influence sectoral electricity use the above estimates can aid the design of european energy and environmental policy

international capital transfers and the choice of production technique a simple two country model abstract a two country two factor two good world with incomplete specialization is explored in the context of international capital transfers where the techniques of production of the same good differ across sectors of the world economy it is shown that the terms of trade for the south will worsen with a capital transfer to the south under a wide range of assumptions about the nature of the technology used in the north owned sector of the south the implied redistribution of world income as well as the implications of a change in the production technique of the foreign owned sector of the south are then examined

welfare comparison under exact aggregation new econometric model of aggregate consumer behavior in the united states and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units the model incorporates time series data on quantities consumed prices the level and distribution of income and demographic characteristics of the population it also incorporates cross section data on the allocation of consumer expenditures for households with different demographic characteristics our econometric model is based on the theory of exact aggregation developed by lau 1977a c this theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior one of the most remarkable implications of lau s theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions using the individual demand functions we can analyze the impact of economic policy on consumer welfare

monopoly and the preemption of competitive recycling the paper shows that a monopolistic primary producer of a recycleable material will choose to preempt market entry by competitive recyclers unless the cost of producing virgin ingot is very high compared to the cost of reconditioning used material unlike earlier results it is shown that in the absence of transaction costs on scrap sales competition by independent recyclers fails to reduce price below its full monopoly level moreover if transaction costs are present the mere threat of entry by independent recyclers may raise the price above that level

the contributions of angus deaton angus deaton was awarded the 2015 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of consumption poverty and welfare this article reviews his contributions to economics

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

semiparametric estimation of lifetime equivalence scales pashardes 1991 and banks et al 1994 use parametric methods to estimate lifetime equivalence scales their approaches put parametric restrictions on the differences in within period expenditure needs across household types the intertemporal allocation of expenditure and the shapes of commodity demand equations this paper puts parametric structure only on the differences in within period expenditure needs across household types this implies structure on the intertemporal allocation of expenditure but leaves the shapes of commodity demand equations unrestricted semiparametric methods are used to estimate within period and lifetime equivalence scales with canadian expenditure data and to test the restrictions imposed on within period expenditure functions estimated lifetime equivalence scales are similar in size to those estimated by banks et al 1994 and exhibit equal lifetime costs for first and second children copyright 2005 john wiley sons ltd

simple tests of distributional effects on macroeconomic equations the presence of distributional effects in macroeconomic equations is shown to coincide with nonlinearity in micro behavioral relationships parameters estimated with aggregate data as in representative agent models contain distributional biases that are not measurable using aggregate data alone tests for distributional effects and other measures of the extent of aggregation problems are derived using distributional data observed over time significant distributional effects are noted for a model of annual aggregate u s commodity expenditure data a static model that accommodates individual heterogeneity is found to be statistically equivalent to a simply dynamic model that accommodates first order autocorrelation

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

elasticity of substitution and the perverse export supply response abstract this paper re examines the possibility of perverse export supply response in the south in a 2 2 2 trade model we find that such perverse response is impossible if the elasticity of substitution in the production of the basic good in the south is greater than or equal to unity

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

graciela chichilnisky s model of north south trade abstract the model of the effects of north south trade set out by chichilnisky in the april 1981 issue of the journal of development economics is shown to contain a number of errors the model is presented anew in this note after corrections are made one can still obtain results similar in spirit to some of those chichilnisky tried to derive although the interpretation of the cause of the results must be substantially altered in particular it is shown that for appropriate parameter values in this model one will find that it is possible for an increase in the demand for the good the north exports to lead to 1 a worsening of the terms of trade for the south 2 a worsening of the distribution of factor incomes in the north and in the south 3 a reduction in the total export revenues of the south and 4 at the same time an increase in the physical volume of the south s exports the cause is in essence a shift in world demand from the good the south exports to the good the north exports which leads to a terms of trade loss for the south income effects following from the terms of trade loss then lead to a situation where the south s own demand for its export good falls by more than its supply thus leading to the preverse effect of an increase in the volume of its exports the paper also considers the model of chichilnisky and cole 1978 this model is similar to that of chichilnisky 1981 and is used to examine the same issues but is closed in a different way it is shown that this second model may give similar results as the first but that also a quite different set of results is now possible closure is therefore shown to play a key role

flexible and semiflexible consumer demands with quadratic engel curves in this paper we introduce three flexible consumer demand systems in which expenditures on goods are quadratic functions of income we view these alternatives as to the demand systems used heretofore in the empirical modeling of rank three demands namely those in which expenditure shares are quadratic functions of the logarithm of income curvature conditions required by theory can be imposed locally during the estimation for each and a semiflexible version can be estimated for illustrative purposes we estimate various forms of two of the systems using canadian data on seven categories of goods for the period 1947 to 1995

terms of trade and domestic distribution a comment abstract this note comments on a paper by chichilnisky in the april 1981 issue of this journal it is shown that within the context of her model a rightward shift in the demand curve of the north for exports from the south can never result in a worsening of the terms of trade for the south it is however possible that the quantity of exports from the south may decline in the new equilibrium due to the income effect of the improved terms of trade

the microeconometric approach to modelling energy demand some results for uk households the paper is concerned with the empirical modeling of domestic demand for energy at the level of the individual household a model of household energy expenditures and energy using durable ownership is described estimation takes place using a pooled sample of households drawn from the repeated cross sections of the annual family expenditure survey fes price and income elasticities are found to be highly dependent on individual household characteristics type of house tenure energy using durable ownership and outside temperature finally the results are placed in a policy relevant context copyright 1991 by oxford university press

estimating monopoly behavior with competitive recycling an application to alcoa this article develops a structural model of the aluminum industry during the period between world war i and world war ii it takes into account both the intertemporal nature of alcoa s cost minimization problem and the competitive recycling sector the model enables estimation of alcoa s degree of market power while allowing for the effect of competition from recycled aluminum previous work has emphasized alcoa s control over the size of the secondary sector in the long run as a source of market power for alcoa the results here indicate that alcoa could exert little influence in this regard but nonetheless had substantial market power

monopoly power and the recycling of raw materials due to increased interest in resource conservation the recycling of raw materials has grown in significance in most industrialized economies in general recycled raw materials require a smaller net input of other basic resources such as energy than do the original primary materials as a consequence the long run cost trends seem to favor an ever higher use of secondary materials over primary materials many of the industries currently practicing recycling are highly concentrated i e aluminium steel newsprint motor oil and other metals with a few exceptions1 the impact of recycling on industry output and price remains largely unexplored the welfare implications of a monopolist confronted by an independent and competitive secondary materials sector are not exactly new concerns in the field of anti trust economics the problem was given its sharpest judicial focus in the famous aluminium company of america alcoa case of 1945 the celebrated jurist learned hand ruled that alcoa did constitute an illegal monopoly under the law since it ultimately had control of the secondary ingot sector through the stock of scrap aluminium milton friedman has suggested however that judge hand was in error and that a competitive recycling sector would tend to push the price of aluminium down to the marginal cost of virgin aluminum production 3 pp 278 79 two authors of a more contemporary genre have drawn conclusions that differ substantially on the important issue of whether or not the procompetitive effects of the recycling sector will be sufficient to achieve pareto optimal results gaskins concludes that the existence of a competitive secondhand market makes things worse in the short run and does not substantially lower the price of aluminum in the long run 4 p 255 alternatively swan finds conditions under which the price of aluminum would be driven down to the marginal cost of virgin aluminum ingot production 7 p 83 gaskins formulates a dynamic model of the aluminurm industry where he considers the impact of recycling on alcoa s monopoly power the critical assumptions of gaskin s model are a linear demand curve with time stationary elasticity and a linear secondary ingot supply function in addition the

north south trade and exported led policies abstract an earlier paper in this journal chichilnisky 1981 formulated a model of north south trade where the south exports a labor intensive commodity in exchange for industrial goods the paper studied moves to new equilibria with higher levels of exports of the south and of industrial demand in the north it was established that with abundant labor and technological dualism such moves lead to more exports but no lower terms of trade consumption and real wages in the south this occurs within walrasian stable and perfectly competitive markets sufficient conditions were also given for the south to improve its terms of trade real wages and consumption through an export expansion this paper comments on several other papers written on these results generalizes the earlier propositions and extends them to a larger class of economies which export labor intensive products but need not have abundant labor it gives a generalization of the earlier results on uniqueness and stability of the equilibria and reports also on recent econometric tests for sri lanka and the u k and numerical simulations of the model

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

the welfare effects and the distributive impact of carbon taxation on italian households in this work the welfare effects and the distributive impact on italian households of the italian carbon tax are calculated the carbon tax has been introduced in italy at the beginning of 1999 asking for smooth increases over a number of years in the prices of most fossil fuels its welfare effects have been calculated using true cost of living index numbers and the compensating variation the parameters have been obtained through estimation of a complete almost ideal demand system using households data from 1985 to 1996 the welfare loss turns out to be quite substantial and affects italian households in a non negligible way but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of carbon taxation as the effect becomes bigger as we move up the income distribution this evidence might encourage the use of carbon taxes at least in the transport sector as cost effective instruments of environmental policy especially after the ratification of the kyoto protocol on climate change

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

preference heterogeneity and the rank of demand systems this article examines the effect of preference heterogeneity on nonparametric and parametric tests of the rank of demand systems using samples of households drawn from the u k family expenditure survey we find that preference heterogeneity increases the rank of demand systems when the effects of household characteristics on demand are removed by semiparametric techniques a rank 3 demand system appears to be an adequate empirical specification for all samples

recycling and market power a more general model and re evaluation of the evidence abstract this paper presents a more general model of the recycling problem and uses it to re examine the alcoa antitrust case of 1945 there are three primary empirical results 1 in the alcoa scenario the recycling problem had been in a steady state since the early 1920 s 2 the primary source of alcoa s market power in contrast to previous work was that most of the aluminum sold by alcoa was used in goods that were not economical to recycle and 3 the existing competitive secondary market was welfare reducing relative to a monopoly in all aluminum production

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase