a globally flexible almost ideal demand system the almost ideal demand system is combined with the fourier expenditure system subject to the assumption that preferences are of the price independent generalized logarithmic class the resulting demand system has the desirable features of each of its components aggregate demand equations are consistent with preferences of a representative consumer and consistent estimates of elasticities are obtained for all observed prices application of the new demand system to u s consumption of meats and fish reveals that it fits the data well and that the restriction to the usual specification is rejected

propensity to consume farm family disposable income from separate sources farm family disposable income is generated from farm operations off farm sources and government payments if these three income components are fungible a dollar from one source is a perfect substitute for a dollar from another source then the propensities to consume each should be the same this study examines the farm family propensity to consume from separate income sources results indicate that the propensity to consume off farm income and government payments is higher than the propensity to consume farm income

ecological economic viability as a criterion of strong sustainability under uncertainty strong sustainability according to the common definition requires that different natural and economic capital stocks be maintained as physical quantities separately yet in a world of uncertainty this cannot be guaranteed to therefore define strong sustainability under uncertainty in an operational manner we propose to use the concept of viability viability means that the different components and functions of a dynamic stochastic system at any time remain in a domain where the future existence of these components and functions is guaranteed with sufficiently high probability we develop a unifying and general ecological economic concept of viability that encompasses the traditional ecological and economic notions of viability as special cases it provides an operational criterion of strong sustainability under a mild form of uncertainty and for medium spatial and temporal scales we illustrate this concept and demonstrate its usefulness by applying it to livestock grazing management in semi arid rangelands publication ecological economic viability as a criterion of strong sustainability under uncertainty available from https www researchgate net publication 46490456 ecological economic viability as a criterion of strong sustainability under uncertainty accessed apr 3 2017

variations in farm consumption and their relationship to income an empirical investigation of illinois farm households empirical tests of household consumption have yielded mixed results regarding the validity of the life cycle permanent income lcpi hypothesis a significant problem with such studies is the diffi

energy consumption and economic growth revisited does the size of unrecorded economy matter abstract we analyze the long run relationship between energy consumption and real gross domestic product gdp in turkey taking into account the size of unrecorded economy since in developing countries mainly due to the unrecorded economic activities the official gdp is not measured correctly the investigation of the linkage between energy consumption and official gdp may not give reliable results in this study empirical results for the case of turkey over the period 1970 2005 suggest that there is a long run equilibrium relationship between the officially calculated gdp and energy consumption besides using the error correction modeling technique we find out that unidirectional causality runs from official gdp to energy in both short and long runs however when we take into account unrecorded economy we detect neither cointegration nor causality between energy consumption and true gdp these empirical findings imply that first energy conservation policies can be implemented in order to reduce greenhouse gas emissions without any adverse effect on the recorded economic activities second the production function in the unrecorded economy is not stable furthermore economic policies to combat unrecorded economy may not serve as a complement to energy conservation policies

why farmers quit a county level analysis we identify the effects of alternative explanatory variables on the propensity of u s farmers to cease farming with a particular emphasis on understanding the roles of off farm employment and federal farm program payments conventional ordinary least squares analysis using all counties suggests that off farm employment has no statistical effect on the net number of farmers quitting between 1987 and 1997 ceteris paribus a more refined analysis which separates counties losing farmers from those that gained farmers reveals subtle and less clear cut effects of off farm employment and federal program payments on farm exits copyright 2001 oxford university press

study on benefit transfer in an international setting how to improve welfare estimates in the case of the countries income heterogeneity abstract the paper aims at investigating the validity of benefit transfer in the case of transfers between countries highly heterogeneous in income and demonstrates relative performance of different benefit transfer methods under these conditions lake water quality valuation studies were conducted in two countries in transition poland and the czech republic they reflected two earlier studies carried out in norway we examine how income elasticity of wtp varies with the levels of income and find support for applying the income elasticity of 1 to adjust transferred welfare estimates in case of high differences in income between countries in addition we show that using site specific measures of income outperforms transfers based on gpd per capita the accuracy of benefit transfer is compared using equivalence testing following the tosc two one sided convolutions test a new more informative way of reporting equivalence is proposed based on computing minimum tolerance level rather than specifying it a priori

energy consumption real income and temporal causality results from a multi country study based on cointegration and error correction modelling techniques abstract unlike previous studies on the causal relationship between energy consumption and economic growth this paper illustrates how the finding of cointegration i e long term equilibrium relationship between these variables may be used in testing granger causality based on the most recent johansen s multivariate cointegration tests preceded by various unit root or non stationarity tests we test for cointegration between total energy consumption and real income of six asian economies india pakistan malaysia singapore indonesia and the philippines non rejection of cointegration between variables rules out granger non causality and imples at least one way of granger causality either unidirectional or bidirectionial secondly by using a dynamic vector error correction model we then analyse the direction of granger causation and hence the within sample granger exogeneity or endogeneity of each of the variables thirdly the relative strength of the causality is gauged through the dynamic variance decomposition technique by decomposing the total impact of an unanticipated shock to each of the variables beyond the sample period into proportions attributable to shocks in the other variables including its own in the bivariate system results based on these tools of methodology indicate that while all pair wise relationships shared common univariate integrational properties only relationships for three countries india pakistan and indonesia were cointegrated for these countries temporal causality results were mixed with unidirectional causality from energy to income for india exactly the reverse for indonesia and mutual causality for pakistan the vdcs were not inconsistent with these results and provided us with an additional insight as to the relatively more dominant direction of causation in pakistan simple bivariate vector autoregressive models for the three non cointegrated systems did not indicate any direction of causality significantly in either direction

energy consumption and gdp causality relationship in g 7 countries and emerging markets abstract the causality relationship between energy consumption and income is a well studied topic in energy economics this paper studies the time series properties of energy consumption and gdp and reexamines the causality relationship between the two series in the top 10 emerging markets excluding china due to lack of data and g 7 countries we discover bi directional causality in argentina causality running from gdp to energy consumption in italy and korea and from energy consumption to gdp in turkey france germany and japan hence energy conservation may harm economic growth in the last four countries

farm consumption and liquidity constraints this study examines whether farm family consumption is liquidity constrained results using 1976 to 1990 data for groups of illinois and kansas farms indicate that consumption behavior is not liquidity constrained analysis of 207 kansas farms in 1989 and 1990 provides similar results these results are in contrast to findings for nonfarm families and support the validity of using the life cycle permanent income hypothesis for farm level modeling and analysis

an investigation of co integration and causality between energy consumption and economic activity in taiwan applying hsiao a version of the granger causality method this paper examines the causality between energy and gnp and energy and employment by applying recently developed techniques of co integration and hsiao s version of the granger causality to taiwanese data for the 1955 1993 period the phillips perron tests reveal that the series with the exception of gnp are not stationary and therefore differencing is performed to secure stationarity the study finds causality running from gdp to energy consumption without feedback in taiwan it is also found that causality runs from gdp to energy but not vice versa

income risk and farm consumption behavior abstract using panel data from illinois grain farmers a direct test of the relationship between income risk and farm consumption behavior is conducted the estimation results indicate that income risk significantly affects farm consumption and the results are robust using alternative risk measures this finding casts doubt on the relevance of the conventional life cycle permanent income hypothesis which implies that risk has no effect on consumption

neoclassical growth the j curve for abatement and the inverted u curve for pollution abstract this paper reexamines the neoclassical environmental growth model of forster to gain insights into the dynamic relationships among pollution abatement effort and economic development whereas the model has heretofore been used to examine steady state levels of capital consumption and environmental quality it also provides a theoretical basis for recent empirical research on j curves for abatement effort and inverted u curves for pollution

choosing a functional form for an international benefit transfer evidence from a nine country valuation experiment abstract this paper investigates the performance of common approaches in international benefit transfer using data from identical and simultaneous contingent valuation studies on marine water quality in nine european countries the environmental good is shared by the study countries but the countries differ substantially in their income levels and other characteristics we compare the performance of value transfers with or without income elasticity of willingness to pay adjustments and function transfers that include only core variables supported by economic theory our results point to a new source of uncertainty associated with function transfer choosing a particular functional form even if only theoretically relevant explanatory variables are used the theory offers no insights with respect to a functional relationship of the dependence e g linear log linear exponential polynomial we show that while different functional forms may offer improvements in model fit this does not necessarily translate to improvements in transfer errors or minimum tolerance levels in our case the value transfer with constant unit income elasticity adjustment corresponding to the log log functional relationship between willingness to pay and income performs the best including additional explanatory variables or using other functional forms worsens the quality of transfers overall our study questions the rationale for using more complicated function transfers in international benefit transfers as the relationships observed within a country or a group of countries does not necessarily translate to dependencies between countries

is the income elasticity of the willingness to pay for pollution control constant how willingness to pay for environmental quality changes as incomes rise is a central question in several areas of environmental economics this paper explores both theoretically and empirically whether or not the willingness to pay wtp for pollution control varies with income our model indicates that the income elasticity of the marginal wtp for pollution reduction is only constant under very restrictive conditions our empirical analysis tests the null hypothesis that the elasticity of the wtp for pollution control with respect to income is constant employing a multi country contingent valuation study of eutrophication reduction in the baltic sea our findings reject this hypothesis and estimate an income elasticity of the wtp for eutrophication control of 0 1 0 2 for low income respondents and 0 6 0 7 for high income respondents thus our empirical results suggest that the elasticity is not constant but is always less than one this has implications for how benefits transfer exercises and for theoretical explanations of the environmental kuznets curve

prospect theory and risk preferences of oregon seed producers prospect theory relates risk preference classifications to gains and losses from a reference income level this study applies prospect theory to reinterpret historical studies of risk preferences of oregon grass seed growers a significant relationship between changes in classifications of preferences and changes in income was found results indicated that those who lost income were concentrated in the category of changing to risk preferrers income changes calculated from crop combinations were also found to be correlated in a theoretically correct pattern with positive measures of risk from crop enterprises the research therefore is consistent with further applications of prospect theory to farm management

farmers marginal propensity to consume an application to illinois grain farms the marginal propensity to consume mpc for a sample of eighteen illinois farms over the 1979 86 period is determined four consumption models were estimated using disposable household income plus depreciation as the measure of income estimated short run mpcs ranged from 0 007 to 0 020 while long run mpcs varied between 0 143 to 0 381 these results indicate farm family consumption responded little to changes in income and that the life cycle hypothesis model explains consumption significantly better than the other models robustness of the results is demonstrated using a larger sample of farms for 1986 87

can proximity to urban green spaces be considered a luxury classifying a non tradable good with the use of hedonic pricing method abstract environmental goods are sometimes considered a luxury that only the rich can afford this is no less true in the case of green spaces however a typical microeconomic lens is not relevant to study the potential luxury of non tradable goods typically the distributional interpretation of the income elasticity of the willingness to pay wtp for such goods would involve stated preferences valuation methods the possibility to describe the luxury of green space proximity based on revealed preferences methods has not been evaluated yet through this study we would like to fill this gap we proposed a three step analysis of the apartment market in lodz poland based on the hedonic pricing method to check how the marginal wtp mwtp for proximity to parks forests differs among apartment price sub segments we discuss whether and to what extent the variability of the mwtp could be linked with the presumed luxury of green space proximity we found that proximity does not result in increased apartment prices for all parks and forests the estimated mwtp for the proximity to selected parks rises in consecutive apartment price sub segments this could be interpreted as a sign of the luxury of living close to these parks by apartment buyers

off farm labor supply responses to permanent and transitory farm income a sample of iowa farm couples is used to evaluate whether off farm labor supply decisions respond to permanent and transitory components of farm income off farm labor supply of both spouses declines in response to increases in permanent farm income farm wives also reduce off farm labor supply in response to positive transitory farm income shocks consequently one mechanism farm households use to smooth their goods consumption when facing fluctuating farm income is to modify their consumption of leisure ability to smooth goods consumption does not imply the absence of liquidity constraints among farm households unless leisure consumption is also smoothed

vietnam s energy sector a review of current energy policies and strategies abstract since the introduction of market oriented economy in 1986 vietnam has made noticeable socio economic progress in this progress the energy sector has played a vital role this role is likely to deepen in the years to come as vietnam strives to achieve even higher levels in economic progress such deepening in the role of energy this paper argues will heighten concerns about the security of energy supply and economic environmental social and political consequences in order to address these issues vietnam has over the last decade developed a suite of energy policies a deeper review of these policies suggests that they are typified by economic growth orientation exclusive focus on a single sector or single issue and largely neglect the significance of cross sectoral and cross thematic issues arising from the interdependencies between energy economy and the polity at large the existing energy policy settings are therefore unlikely to be able to provide a satisfactory redress to the challenges noted above this paper provides an overview of the current energy policies with a view to identify areas where further policy effort is needed in order to facilitate a sustainable development of the vietnamese energy sector

application of flexible function forms in climate change research theoretical regularity and model selection abstract demand systems are widely applied to the energy and fuel demand research as result of growing concerns over climate change and global warming especially these issues in cities however in existing literature on consumer demand the authors too often ignore the theoretical regularity conditions or do not report the results of full regularity checks as a consequence the duality theory and second order conditions for optimizing behavior are invalid in face of the real world problem and the conclusions or suggestions proposed based on the empirical researches are thereby inappropriate and even misleading driven by the gap between theoretical models and practical problems we estimate the demand for road passenger transport in china which is considered to be one of the most important sources of air pollution in city using three flexible functional forms the rotterdam model the almost ideal demand system aids and the quadratic aids quaids we focus on all theoretical regularities positivity monotonicity curvature adding up homogeneity and symmetry and argue that unless there is a coincidence flexible functional forms are subject to certain theoretical regularities and that all these regularities are equally important both in theory and in practice empirical estimation shows that the aids model is the only model that is able to provide theoretically consistent estimation of the demand for road passenger transport in china our results also imply that the private transportation is elastic in price changes compared to urban public transportation and intercity public transportation we bridge the gap between theoretical modelling and empirical research on consumer energy fuel demand especially in the research about consumer demand for energy intensive products and services our study points out a crucially important fact that the researchers and policy makers must pay attention to the regularities of the theoretical modelling in the practical applications

energy and economic growth in the usa a multivariate approach abstract this paper examines the causal relationship between gdp and energy use for the period 1947 90 in the usa the relationship between energy use and economic growth has been examined by both biophysical and neoclassical economists in particular several studies have tested for the presence of a causal relationship in the granger sense between energy use and economic growth however these tests do not allow a direct test of the relative explanatory powers of the neoclassical and biophysical models a multivariate adaptation of the test vector autoregression var does allow such a test a var of gdp energy use capital stock and employment is estimated and granger tests for causal relationships between the variables are carried out although there is no evidence that gross energy use granger causes gdp a measure of final energy use adjusted for changing fuel composition does granger cause gdp

a note on the causal relationship between energy and gdp in taiwan abstract this paper re examines the causality between energy consumption and gdp by using updated taiwan data for the period 1954 1997 as a secondary contribution we investigate the causal relationship between gdp and the aggregate as well as several disaggregate categories of energy consumption including coal oil natural gas and electricity applying granger s technique we find bidirectional causality between total energy consumption and gdp we find further that different directions of cause exist between gdp and various kinds of energy consumption

is the income elasticity of environmental improvements less than one we estimated the income elasticity of environmental improvements for a number of european data sets the value of this parameter is consistently found to be less than one with few exceptions our findings are compared with state of the art contingent valuation studies from other countries we also compared our findings with those reported in the literature on charitable donations and corporate donations these studies show a similar pattern donations decrease as a percentage of income as income increases

the relationship between energy and gnp further results this paper reexamines the casuality between gnp and energy consumption by using updated us data for the period 1947 1979 as a secondary contribution we investigate the causal relationship between energy consumption and employment applying sims technique we find no causal relationship between gnp and energy consumption we find further that there is a slight unidirectional flow running from employment to energy consumption economic interpretations of the empirical results are also presented

the demand for gasoline evidence from household survey data summary in this paper we investigate the demand for gasoline in canada using recent annual expenditure data from the canadian survey of household spending over a 13 year period from 1997 to 2009 on three expenditure categories in the transportation sector gasoline local transportation and intercity transportation in doing so we use three of the most widely used locally flexible functional forms the almost ideal demand system aids of deaton and muellbauer 1980 the quadratic aids quaids of banks et al 1997 an extension of the simple aids model that can generate quadratic engel curves and the minflex laurent model of barnett 1983 which can also generate quadratic engel curves we pay explicit attention to economic regularity argue that unless regularity is attained by luck flexible functional forms should always be estimated subject to regularity as suggested by barnett 2002 and impose local curvature to produce inference consistent with neoclassical microeconomic theory our findings indicate that the curvature constrained minflex laurent model is the only model that is able to provide theoretically consistent estimates of the canadian demand for gasoline our estimates show that the own price elasticity for gasoline demand in canada is between 0 738 and 0 570 less elastic than previously reported in the literature copyright 2013 john wiley sons ltd

a multivariate cointegration analysis of the role of energy in the us macroeconomy abstract this paper extends my previous analysis of the causal relationship of gdp and energy use in the usa in the post war period a majority of the relevant variables are integrated justifying a cointegration analysis the results show that cointegration does occur and that energy input cannot be excluded from the cointegration space the results are plausible in terms of macroeconomic dynamics the results are similar to my previous granger causality results and contradict claims in the literature based on bivariate models that there is no cointegration between energy and output

effects of subsidized wheat consumption by state in india this paper reports the results of a study of the effects of the indian government s consumer subsidies on wheat demand results indicate consumption of subsidized wheat is higher in urban areas than in rural areas the public distribution of wheat in most states had little effect on demand in the commercial market which suggests the government is effective in targeting subsidized wheat to poor consumers

the causal relationship between electricity consumption and economic growth in the asean countries abstract this paper investigates the causal relationship between electricity consumption and economic growth among the association of south east asian nations asean 4 members namely indonesia malaysia singapore and thailand using modern time series techniques for the period 1971 2002 the results indicate that there is a bi directional causality between electricity consumption and economic growth in malaysia and singapore this means that an increase in electricity consumption directly affects economic growth and that economic growth also stimulates further electricity consumption in the two countries however uni directional causality runs from economic growth to electricity consumption in indonesia and thailand without any feedback effect thus electricity conservation policies can be initiated without deteriorating economic side effects in the two countries

causality between energy consumption and economic growth in india a note on conflicting results abstract this note examines the different direction of causal relation between energy consumption and economic growth in india applying engle granger cointegration approach combined with the standard granger causality test on indian data for the period 1950 1996 we find that bi directional causality exists between energy consumption and economic growth further we apply johansen multivariate cointegration technique on the different set of variables the same direction of causality exists between energy consumption and economic growth this is different from the results obtained in earlier studies

energy consumption economic growth and prices a reassessment using panel vecm for developed and developing countries this paper reinvestigates the energy consumption gdp growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002 among the energy exporters there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run while in the developing countries energy consumption stimulates growth only in the short run the former result is also found for energy importers and the latter result exists only for the developed countries within this category in addition compared to the developing countries the developed countries elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary lastly the implications for energy policy calling for a more holistic approach are discussed c 2006 elsevier ltd all rights reserved

energy consumption and economic growth in vietnam abstract this study attempts to analyse the relationship between energy consumption and economic growth in vietnam using the neoclassical solow growth framework for the 1971 2011 period the concept and methods of cointegration and granger causality are used to establish the relationship between the variables of interest our results confirm the existence of cointegration among the variables in particular energy consumption fdi and capital stock were found positively influence economic growth in vietnam the granger causality test revealed unidirectional causality running from energy consumption to economic growth hence vietnam is an energy dependent economy and any energy or environment policy drawn up in an attempt to conserve energy will jeopardise the process of economic development in vietnam for this reason the renewable energy policy should be given attention to provide sufficient supplies of energy to speed up economic expansion investment in r d may be required to incentivise private public institutions to engage in this innovation while the awareness for energy saving policy among public could be integrated to meet social economic development

economic growth and energy consumption revisited evidence from linear and nonlinear granger causality the relationship between energy consumption and economic growth is considered as an imperative issue in energy economics previous studies have ignored the nonlinear behavior which could be caused by structural breaks in this study both linear and nonlinear granger causality tests are applied to examine the causal relationship between energy consumption and economic growth for a sample of asian newly industrialized countries as well as the u s this study finds evidence supporting a neutrality hypothesis for the united states thailand and south korea however empirical evidence on philippines and singapore reveals a unidirectional causality running from economic growth to energy consumption while energy consumption may have affected economic growth for taiwan hong kong malaysia and indonesia policy implications are also discussed

electricity consumption growth nexus the case of malaysia abstract the goal of this paper is to model the relationship between electricity consumption and real gross domestic product gdp for malaysia in a bivariate and multivariate framework we use time series data for the period 1971 2003 and apply the bounds testing approach to search for a long run relationship our results reveal that electricity consumption real gdp and price share a long run relationship the results of the autoregressive distributed lag ardl estimates of long run elasticity of electricity consumption on gdp are found to be around 0 7 and statistically significant finally in the short run the results of the causality test show that there is a unidirectional causal flow from electricity consumption to economic growth in malaysia from these findings we conclude that malaysia is an energy dependent country leading us to draw some policy implications this paper adds support and validity thus reducing the policy makers concern on the ambiguity of the electricity and growth nexus in malaysia

the environment as a factor of production the authors develop a model of environmental resource use in production with an empirical analysis of how electric power companies consume and bank sulfur dioxide pollution permits the model considers emissions fuels and labor as variable inputs with quasi fixed inputs of permits and capital incorporating information from permit markets allows the authors to distinguish between user costs and asset shadow values their findings indicate that firms are holding stocks of pollution permits for reasons other than short term cost savings the results also reveal substantial substitution possibilities between emissions permits stocks and other factors of production the authors speculate that anticipated secondary markets for carbon offset inventories related to the flexibility mechanisms of the kyoto protocol will have similar effects for greenhouse gas emitting firms

structural break unit root and the causality between energy consumption and gdp in turkey abstract this paper tries to investigate a series of unit root and causality tests to detect causality between the gdp and energy consumption in turkey employing hsiao s version of granger causality method for the 1950 2000 period the conventional unit root tests indicate the series are i 1 whereas the endogenous break unit root tests proposed by zivot and andrews zivot e and andrews d w k 1992 further evidence on the great crash the oil price shock and the unit root hypothesis journal of business and economics statistics 10 251 270 and perron perron p 1997 further evidence on breaking trend functions in macroeconomic variables journal of econometrics 80 355 385 reveal that the series are trend stationary with a structural break therefore it is inappropriate to take the first difference of the data to achieve stationarity the main conclusion of this study is that there is no evidence of causality between energy consumption and gdp in turkey based on the detrended data

demand for environmental quality an empirical analysis of consumer behavior in sweden in this paper we estimate the income elasticity of demand for recreational services and other traditional groups of goods in sweden and test for potential changes in such estimates over the twentieth century due to the difficulty of directly observing the demand for recreational services we employ an indirect methodology by using the demand for some outdoor goods as a proxy for the demand for recreational services in line with most prior research our results confirm the expectation that recreational services as a public good is a luxury good in sweden our results also show that the income elasticities for traditional goods are stable over time indicating that consumer preferences for expenditure on these specific commodities do not change over time

the relationship between the income elasticities of demand and willingness to pay abstract the relationship between income and willingness to pay for collectively provided public environmental goods is investigated we show that while the income elasticity of willingness to pay and the ordinary income elasticity of demand are related knowledge of one is insufficient to determine the magnitude or even the sign of the other the income elasticity of willingness to pay is influenced by additional factors which are generally unobservable examples are provided to illustrate the degree to which the two income elasticities may diverge our results indicate that even when goods are demand luxuries they may or may not have income elasticities of willingness to pay which are greater than one

is there an environmental kuznets curve for sulfur abstract most existing estimates of the environmental kuznets curve ekc for sulfur which use samples of mainly high income countries indicate a maximum emissions turning point at middle to lower high income levels of gdp per capita we use a larger and more globally representative sample than previous sulfur ekc studies we find that sulfur emissions per capita are a monotonic function of income per capita when we use a global sample and an inverted u shape function of income when we use a sample of high income countries a model estimated in first differences results in a monotonic ekc when estimated with both high income and global samples reductions in emissions are time related rather than income related

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

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