estimating theoretically consistent demand systems using cointegration techniques with application to greek food data abstract the use of time series techniques cointegration and error correction models has been offered as a potentially promising way in estimating demand systems that resolve the perennial issue of violating the theoretical postulates of homogeneity and symmetry the empirical results of this paper based on linearized aids and greek food data indicate that sample size aggregation schemes and model specification seem to be important factors in the estimation of a theoretically consistent demand system they also show that homogeneity is sensitive to sample size while symmetry is sensitive to the aggregation scheme adopted

consumers demand in the long run some evidence from uk data a system of demand functions is estimated with quarterly uk data using recently developed techniques for the estimation and testing of cointegrated systems these fully modified methods aim to remove nuisance parameters from the limiting distributions which arise with non stationary data so that conventional inferntial procedures can be applied it is found that the homogeneity and symmetry restrictions of consumer theory appear to be reasonable descriptions of aggregate behaviour

learning by doing and the introduction of new goods a dynamic general equilibrium model is developed in which goods are valued according to the characteristics they contain the set of goods produced in any period is endogenously determined and learning by doing is the force behind sustained growth it is shown that the set of produced goods changes in a systematic way over time with goods of higher quality entering each period and those of lower quality dropping out the model is then used to study the effect of introducing a traditional sector in which there is no learning

decomposing learning by doing in new plants the paper examines learning by doing in the context of a production function in which the other arguments are labor human capital physical capital and vintage as a proxy for embodied technical c

indexation staggering and disinflation abstract since high inflation makes very frequent price adjustments desirable costs of taking optimal price decisions may become high and indexation may emerge as an economical rule of thumb to update prices between optimal adjustments we introduce indexation in a model of staggered price setting where individual prices when not adjusted by inflation are set optimally we show that it is more difficult to disinflate in a model with indexation than in a standard fixed price staggering model the costs associated with a given path of money disinflation are higher and the time necessary to stabilize an inflationary economy while keeping output at its natural level is about three times longer as a consequence the paper explains why disinflation may be more difficult in high inflation economies

a semi nonparametric approach to the demand for uk monetary assets we estimate an asymptotically ideal model of the demand for uk personal sector monetary assets we use data that are consistent with utility maximizing behaviour and find that uk monetary assets are generally substitutes in use the estimated elasticities of substitution during the 1980s and the early 1990s indicate that a relatively broad monetary aggregate should be used in economic studies the results also suggest that any policy based on interest or user cost elasticities of substitution between financial assets should be based on the morishima elasticities as the allen uzawa calculation can give misleading results

voluntary export restraints and rationing u k leather footwear imports from eastern europe following the imposition of a quantitative import restriction someone somewhere must be quantity rationed concentrating on demand we develop methods to test and allow for the presence of rationing in the estimation of demand equations and in the calculation of the welfare effects of quantitative restrictions using a ces model we analyse the voluntary export restraints on u k imports of two types of leather footwear from comecon countries the results suggest that even if prices did not rise to clear the market u k consumers could have lost up to 60 million in 1986 from these restrictions

dynamic specification and misspecification in systems of demand equations a testing strategy for model selection dynamic specification and misspecification in systems of demand equations a testing strategy for model selection

an intertemporal system of dynamic consumer demand functions abstract this paper constructs and estimates a system of dynamic consumer demand equations under the assumption of rational expectations about anticipated human wealth the traditional one period budget constraint is replaced by the lifetime anticipated wealth constraint lagged dependent variables are rationalized by an adjustment cost argument in the model presented both the dynamic adjustment coefficients as well as the parameters characterizing the underlying long run preferences are identified and can be estimated we find that a weak version of the reh cannot be rejected on the data in common with most empirical studies on demand behaviour we have to reject the symmetry restrictions

expenditure allocation across nondurables services durables and savings an empirical study of separability in the long run the separability of categories of consumption expenditures and savings are empirically examined in the context of an error correction model of aggregate quarterly expenditure allocations in canada some evidence is found for separability of consumption allocations from savings in both the long run structure and short run dynamics of the model lending some support to the use of the assumption in modelling consumption behaviour

testing dynamic specification for import demand models the case of cotton error correction models impose few prior restrictions on dynamic model specification and allow the data to determine model structure despite this obvious advantage few applications have adopted the error correction model to explain trade flows an error correction model of cotton import demand is estimated for france japan and hongkong a variety of tests are applied to determine the dynamic structure of the model it is found that the most general models are those that best fit the data for cotton import demand long run elasticities from these general models are significantly different than elasticities derived from a comparable static model

consumer behaviour in greece an application of the almost ideal demand system this paper estimates the almost ideal demand system on greek data for the period 1960 1986 for seven commodity groups the results conform with earlier research findings that the homogeneity and symmetry restrictions of demand theory are broadly inconsistent with the data the imposition of the restrictions leads to substantial changes in the estimated elasticities in both the static and dynamic specifications the introduction of habit effects with lagged consumption supported statistically by the data led to plausible results leaving however the problem of rejection of homogeneity and symmetry intact

price premium for high efficiency refrigerators and calculation of price elasticities for close substitutes a methodology using hedonic pricing and demand systems this article uses the hedonic pricing method to estimate the price premium paid for the highest energy efficiency label a in the refrigerators market of the basque autonomous community spain the estimated figure is 8 9 of the final price or about 60 euro which represents one third of the energy savings that a consumer gets during the lifetime of a refrigerator with the highest energy efficiency label this figure is then combined with the linear version of the almost ideal demand system la aids to obtain own and cross price elasticities of demand the information presented here is useful for policy design and analysis the results indicate that the demand for refrigerators with the highest energy efficiency label is highly sensitive to price variations

estimation of a continuous time dynamic demand system a continuous time dynamic model of consumers demand explicitly taking account of the roles of depreciation interest rates habits and stocks is estimated using recently developed techniques from discrete quarterly uk data on three broad commodity groupings the results suggest that whilst being a significant determinant of demand the actual magnitude of the influence of changes in interest rates may be relatively small in the long run the cross price effects of durable goods are also found to be statistically significant and symmetry of long run compensated price responses is not rejected copyright 1992 john wiley sons ltd

catch up in turn in a multi country international trade model with learning by doing and invention abstract we consider how the world income distribution evolves over time when both learning by doing and invention are the engines of economic growth and when countries interact with each other through international trade the main findings are i catch up is possible ii in the three country model transitional dynamics are much richer than in the two country model in particular catch up may occur in turn there may be a first stage in which the middle income country grows fastest closing the gap with the richest country but increasing the income difference with the poorest followed by a second stage where the poorest country catches up

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

the logic of testing structural change in meat demand a methodological analysis and appraisal in the past two decades the profession has expended valuable resources testing structural change in meat demand with mixed results overlooked to date is a fundamental methodological problem that transcends all methods of testing for structural change in this study a methodological framework is used to show that there is no valid test of structural change because of this result additional criteria from the methodology literature are used to evaluate the literature on structural change in meat demand and to provide suggestions for fertile areas of future research

the consumer demand for education this paper presents new evidence on the estimation of the demand for education unlike previous studies this study uses the translog les indirect utility function to analyze the demand for education within a multicommodity framework for annual u s consumption expenditures for the period 1958 82 various restrictive existing specifications of the demand for education are tested and rejected income and price elasticities of education are estimated that are larger than those of existing studies taste change has moved toward the consumption of education and the consumer has suffered from a loss in welfare due to increases in prices over time

identification of habit in japanese food consumption abstract demand models were estimated for five commodities using annual retail level japanese data estimates were made with the houthakker taylor houthakker h s taylor l d 1970 consumer demand in the united states analysis and projections harvard university press new york ma state adjustment model significant lags were found for meat and cereal which means that habit is important for these commodities some habit affects were also found for seafood

testing an alternative habit persistence model marshall long ago noted the phenomenon of past consumption being highly correlated with current consumption if habit was indeed a major determinant of current consumption behavior then the neoclassical theory of utility maximization should take it into account a rigorous incorporation of habit formation into consumer theory began with gorman 12 pollak 21 22 23 laid out the theoretical conditions that needed to be satisfied in order for habit persistence to be consistent with the utility maximizing model of consumer behavior competent empirical work in this area was done initially by houthakker and taylor 14 with subsequent studies by manser 16 phlips 18 19 pollak and wales 24 anderson and blundell 2 and blanciforti and green 8 these papers have focused on examining the impact of measured past consumption on current consumption blundell 9 provides a comprehensive review of this literature

estimating the price elasticity of demand for family and hired farm labour in england and wales the agricultural workforce in the uk has been declining since the middle of the last century however the different types of agricultural labour have been variously affected and hence the composition of the agricultural workforce has been undergoing continuous change these changes in the structure of the agricultural workforce have serious implications not only for the policy makers but also for farm workers and farm businesses and those that service their needs the study compares and explores the own price elasticity of demand for two groups of agricultural labour that of family and hired to enable the effects of agricultural policy on the structure of the agricultural workforce in both the short and long run to be estimated this was done using two different methodologies single equation and duality based system models the similarities in the resulting elasticities give confidence in the estimates these estimates can be used to help forecast the future structure of the agricultural workforce

klem substitutability a dynamic flexible demand system 1990 klem substitutability a dynamic flexible demand system applied economics vol 22 no 2 pp 275 283

cost sharing versus block funding in a federal system a demand systems approach this paper employs a maximizing framework consistent with the axioms of consumer preference to analyze local government s choice of spending on different social services within this framework it is possible to include both block funding and cost sharing intergovernment transfer schemes canada s movement to block funding from the cost sharing method of financing provincial expenditures on hospitals medical care and post secondary education is analyzed the results indicate that the provincial governments actions are generally consistent with a significant maximizing model of consumer behavior and that the change to block funding had a significant impact on real provincial funding of some previously cost shared social services

wage indexation and output stability revisited since gray 1976 and fischer 1977 the accepted view is that wage indexation stabilizes output when shocks are nominal and destabilizes output when shocks are real this paper examines this proposition s validity when wage indexation is based on lagged inflation it shows that i in a gray fischer economy with plausible parameters indexing wages to lagged inflation destabilizes output regardless of the type of shocks ii the gray fischer result may be restored if nominal shocks have a strong direct effect on prices given wages iii wage indexation to lagged inflation can be neutral for output stability if monetary policy is accommodative

forecasting with the almost ideal demand system evidence from some alternative dynamic specifications the almost ideal demand system is used as a representation of long run demands in discrete time and continuous time error correction models to produce forecasts of budget shares beyond the sample period the estimated models are subjected to a battery of tests and an analysis of the forecasts indicates that continuous time adjustment mechanisms based around fully modified estimates of the long run preference parameters provide a remarkably accurate method of forecasting budget shares

testing mobility models a rejoinder to erikson and goldthorpe social mobility theorists like erikson and goldthorpe 1992 2002 and goldthorpe 2007 define social classes by aggregating occupations into groups which they call social classes when this happens it is legitimate to ask whether all of the parent s occupations in the class have the same impact on the respondent s life time outcomes whether that be social class educational attainment earnings or occupation this and the some of the earlier work on the sociology of class by halbwachs 1958 and bourdieu 1986 p 101 1987 which emphasized within social class homogeneity was the motivation behind our attempt to provide a rigorous test of their social class model in mcintosh and munk 2008 this was done by formulating their class schema as a set of linear restrictions and then testing them using a likelihood ratio test this way of testing theoretical models also has long tradition in econometrics and sociology and we think that empirical work in intergenerational mobility would benefit from the application of this methodology that class systems should be tested in this way is a general proposition which erikson and goldthorpe 2008 appear to reject when they advise mobility researchers against taking our econometrics seriously this seems to be the major source of disagreement between us erikson and goldthorpe equate a significant statistical relation between origin and destination class membership with the statistical legitimacy of the class concept itself these are not the same and not making this crucial distinction causes them to miss the point of our work they infer that we do not share or even understand their objectives however they could examine our recent paper on educational mobility mcintosh and munk 2007 p 114 which generates an

union wage settlements during a disinflation this paper examines the role of union wage contracts in the persistence of inflation and the implication of these contracts for the problem of disinflation in the united states a quantitative model of overlapping con tracts explicitly oriented toward the major union sector is developed the model takes account of expectations of future wage price and employment conditions as in more aggregated models that have been used in macroeconomic research in addition the distribution of workers according to contract length as well as deferred wage increases and escalator clauses are explicitly used in the model the main aim of the model is to determine the constraints which these contracts impose on disinflation paths the model indicates that the maximum speed of disinflation is extremely slow in the early phases if a rise in unemployment is to be avoided but increases considerably before the new lower rate of inflation is reached the disinflation path is considerably slower than that observed after hyperinflation periods however the existence of a path of inflation reduction raises questions about whether the institution of union wage con tracts is really the direct cause of costly disinflations or whether their influence works indirectly by raising credibility problems about a monetary disinflation this abstract was borrowed from another version of this item

elasticities in aids models in the literature a variety of approaches have been used to calculate demand elasticities in almost ideal demand system aids models of demand it is common to estimate the linear approximate almost ideal demand system la aids instead of the aids when the la aids is estimated all of the previously reported approaches to compute elasticities are theoretically incorrect this paper presents correct formulas for la aids elasticities and illustrates the potential errors from using incorrect computing the almost ideal demand system aids of deaton and muellbauer 1980a b has become popular in recent years anderson and blundell blanciforti and green 1983a b blanciforti green and king chalfant eales and unnevehr fujii khaled and mak fulponi heien and willett murray parsons ray a variety of approaches to computing elasticities has been used and some of the approaches may lead to significant errors this paper clarifies the differences between alternative approaches to estimating demand elasticities in aids models

non stationarity and the import demand for virgin olive oil in the european union the aim of this study is to analyse the importation of virgin olive oil to european union countries paying special attention to the spanish export contribution the method used is based on the estimation of an imports demand system the novelty of the paper lies not in the modelling approach but in the explicit consideration of the univariate characteristics of series that is included in the analysis since prices are non stationary cointegration among them has been tested results indicate that they are cointegrated and that homogeneity holds as a result relative prices are included in the imports demand system structural change is also considered so as to account for the entrance of both spain and greece into the eu during the period studied results demonstrate the leadership of spain within the eu virgin olive oil market as well as the increasing competitiveness of greek oil

age trend and cohort effects in a macro model of canadian expenditure patterns a quadratic almost ideal demand system allowing for age cohort and trend effects is developed at the macro level the model is estimated by maximum likelihood using a three tier iterative search method applied to pooled 1961 1992 time series for five regions of canada and six categories of expenditure hypothesis tests indicate support for the model specification elasticities are compared with those reported in other studies with special attention to food effects of demographic and trend variables on elasticities and expenditure shares are investigated an overall conclusion is that such effects can be very important in a macro demand system

the demand for food and beverages in norway abstract the demand for food and beverages is estimated within a three stage demand model the separability structure of the model is checked by nonparametric tests some generalized axiom of revealed preference garp violations are detected in one of the subsystems however they are removed by small adjustments in the quantities of fish and the violations are interpreted as results of measurement errors the almost ideal demand system is used in the static and a dynamic version the results of various specification and misspecification tests suggest that the static version performs poorly as compared with the dynamic version norwegian demand elasticities for disaggregate food commodities have rarely been estimated within a system framework so the results are of intrinsic interest the elasticities estimated by using the dynamic model are of the expected signs and reasonable magnitudes the values are stable over time for most commodities elasticities estimated within a subsystem are conditional on the goods included in that system and they may differ from the more policy relevant unconditional elasticities estimated within a system including all goods adjustment formulas are used to approximate the unconditional elasticities from the estimated conditional elasticities there are considerable differences between the numerical values of the conditional and unconditional elasticities for several of the foods the unconditional own price elasticities are in the interval 0 20 to 0 89 the own price elasticities for hot drinks and for milk are most inelastic the unconditional expenditure elasticities for food away from home fish soft drinks and alcoholic beverages are above one while the expenditure elasticity for hot drinks is about zero

interrelated factor demands for manufacturing a dynamic translog cost function approach abstract in this paper we report the results of estimating a joint model for labour capital and energy using the transcendental logarithmic cost function of christensen jorgenson and lau 1973 this allows us to determine both the own price and cross elasticities of substitution between labour capital and energy we combine a model of factor shares with a dynamic adjustment process for each factor we also impose on the cross equation restrictions necessary to provide additivity homogeneity and symmetry since the covariance matrix in systems of share relationships is singular we follow the suggestions of anderson and blundell 1982 and employ a mullivariate error corrrection model the results suggest that additivity symmetry and homogeneity restrictions do hold and that there are short run increasing returns to scale

fewer fish for higher profits price response and economic incentives in global tuna fisheries management this paper evaluates industry wide economic incentives arising from changes in product prices in an industry exploiting a common renewable resource tropical tunas that is regulated via output limits changes in prices alter economic incentives by affecting revenues profits conservation and nonmarket public benefits economic incentives in industries exploiting common resources have been examined from multiple angles however industry level variation in market prices arising from changes in public regulation has not been explored we analyse the impact on economic incentives due to changes in output limits and market prices through estimation of ex vessel price and scale flexibilities for imported skipjack and yellowfin in thailand s cannery market the unitary scale flexibility estimated from the general synthetic inverse demand systems indicates no loss in revenue and even potential profit increases resulting from lower harvest levels that could arise from lower catch limits however for a revenue neutral or positive outcome to be achieved the three inter governmental tuna regional fisheries management organizations which manage the majority of the yellowfin and skipjack tuna in the pacific and indian oceans would have to coordinate multilaterally to set the catch limits for both species

forecasting food demand in tunisia under alternative pricing policies abstract food policy in tunisia employs mainly consumer price subsidies and programs all directed to the reduction of poverty in the new environment of globalization and trade liberalization these consumer subsidies are being questioned inefficiency and self generated inequalities have increased pressure to remove or reduce subsidies the objective of this paper is to assess the impact of two alternative schemes of price subsidies management food demand forecasts are based on estimated parameters from an aids model together with some assumptions about the exogenous variables and population projections results indicate that a gradual subsidies removal will not affect substantially food expenditure structure non subsidized food products would increase their relative position while traditional products would lose slightly in terms of welfare implications changes in the subsidy policy would mainly affect low income groups

some evidence on the performance of size correction factors in testing consumer demand models abstract simulation experiments with the rotterdam model show that restricting the covariance matrix and using its unbiased estimate is quite helpful when performing the wald test while application of italianer s correction factor works quite well when using the likelihood ratio test

advertising and food drink and tobacco consumption in the united kingdom a dynamic demand system this paper tests for the influence of advertising on the inter product distribution of consumer demand for non durable goods and services in the uk 1963 1996 the long run demand for seven categories of non durable products is modelled through an advertising augmented version of the almost ideal demand system aids which is incorporated into an error correction model to allow for short run dynamic adjustments to long run equilibrium positions model estimates confirm that the restrictions of price homogeneity and symmetry appear to be consistent with the data yield measures of the various types of demand elasticity that are in general plausible confirm the strong influence of prices on the allocation of consumer expenditure but find little evidence to support the hypothesis that advertising has the power to effect marked changes in the inter product pattern of consumer demand in the uk

a cointegrated vecm demand system for meat in italy this article applies cointegration techniques to estimate a monthly demand system for meat in italy in contrast to existing studies where engle and granger s two step procedure and triangular vector error correction model tvecm representations are usually exploited it applies a cointegrated vector error correction model vecm where also prices and expenditure enter endogenously the system and the cointegration rank is not assumed to be known a priori but subject to inference it highlights some of the advantages of using the vecm compared to the tvecm including the possibility of testing the cointegration rank of the system and the weak and strong exogeneity of prices and expenditure within a well specified statistical model this may lead to remarkable improvements in the efficiency of parameters system estimates

a cross country analysis of consumption patterns this paper uses the system wide approach to analyse the consumption patterns in 18 oecd countries the results show that on average the oecd per capita consumption increased by 3 per annum and prices increased by about 7 per annum oecd consumers spend about half of their income on food housing and transport it is also shown that in most oecd countries food housing and medical care are necessities and clothing durables transport and recreation are luxuries and that the demand for all goods considered are price inelastic the controversial hypothesis of stigler and becker 1977 that tastes are the same across countries is also tested and it is found that the oecd consumption data do not support their claim

dynamic factor demand equations in u s and canadian agriculture abstract this research provides one of the first empirical estimates of a data based dynamic factor demand model for american and canadian agriculture models such as these deserve more widespread use in the empirical analysis of agriculture these models have the advantage that they do not impose inappropriate dynamics on the data rather they permit the data to select the appropriate dynamics we use a model originally developed by anderson and blundell this model is a general first order dynamic model which contains as testable hypothesis several simpler models this model permits us to estimate the long run agricultural production structure as a subset of the dynamic parameter estimates we will test this long run structure for symmetry homotheticity and neutral technical change the estimated models may be used to test for three alternative dynamic structures in the limit dynamics may not be needed and we can test for the static long run equilibrium model two intermediate cases are the autoregressive and the partial adjustment models which are simpler than the general model but still include dynamics our results suggest that the long run equilibrium model is unsatisfactory in both countries a dynamic model is needed in both countries the two more restricted dynamic models are rejected the general dynamic model is required in canada the long run equilibrium structure is homothetic with neutral technical change in the united states homotheticity is also accepted but neutral technical change is rejected

the implications of tourism specialisation in the long run an econometric analysis for 13 oecd economies abstract the paper aims to illumine the longrun impact of specialisation in tourism it is shown that specialisation in tourism may not be deleterious for economic welfare once the terms of trade are considered conditions for an improvement in welfare are laid out and their existence tested by econometric methods within an almost ideal demand system formulation of tourist expenditure for 13 oecd economies the analysis uses cointegration techniques and novel sequential break dating procedures evaluated where the time dimension is small the values of the estimated parameters suggest that long run growth may not be harmed by tourism specialisation

errors of aggregation and errors of specification in a consumer demand model a theoretical note consumer demand models based on the concept of a representative or average consumer suffer from aggregation error misspecification of the underlying micro utility maximizing model which is virtually inevitable also results in error this note provides a theoretical investigation of the relationship between the two types of error misspecified expenditure support functions for demand systems at the micro level induce the same misspecified structure in the corresponding expenditure functions at the macro level and the errors at the two levels are shown to be of similar order jel classification d11 erreurs d agregation et erreurs de specification dans un modele de demande du consomma teur une note theorique les mod eles de demande du consommateur fondsur le con sommateur moyen ou repr esentatif souffrent d une erreur d agr

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

spanish food demand a dynamic approach other empirical works have demonstrated that spanish food demand seems to have a dynamic structure however the commonly used dynamization processes are too restrictive to explain the dynamic food consumers behaviour a more general model that is able to incorporate different dynamic structures partial adjustment first autoregressive and static and allows for direct estimation of long run coefficients has been used this general framework is applied to the generalized addilog demand system gads for annual spanish data covering 1964 to 1991 results indicate that an autoregressive gads fits well the data satisfying the theoretic restrictions finally the expenditure and price elasticities are calculated

linear and quadratic spline models for consumer demand functions this paper combines flexible functional form techniques which provide local approximations to indirect preferenc es with respect to prices and incomes with spline techniques that provide global approximations with respect to real income the main technical problem is that real income or utility is an unobserved variable starting with the normalized quadratic expenditure functio n linear and quadratic spline models are introduced theoretically and are empirically estimated using japanese consumer data for four goods fo r the years 1970 87 the semi nonparametric literature initiated by a r gallant is reviewed and a limited semi nonparametric property is claimed to hold for the spline models presented in the paper

testing restrictions in a flexible dynamic demand system an application to consumers expenditure in canada traditionally restrictions on systems of demand equations have been tested using static models whilst being estimated with time series data this paper develops a vector time series model of expenditure shares in the context of a singular dynamic demand system the model allows for non symmetric and non homogeneous short run behaviour the homogeneity and symmetry restrictions are only examined in the long run structure results based on canadian time series data are presented and reject the current practise of static modelling while restrictions suggested by economic theory are not rejected when imposed on the long run structure

dynamic translog and linear logit models a factor demand analysis of interfuel substitution in us industrial energy demand abstract we compare and contrast two popular dynamic flexible functional forms for cost functions the translog and the logit j bus econ stat 8 1990 347 353 using data on us industrial energy demand from 1960 to 1992 which has been analysed by previous studies energy econ 11 1989 89 94 appl econ 21 1989 931 945 j bus econ stat 13 1995 459 465 we show the crucial role played by different dynamic formulations of the translog in this analysis of factor demands with respect to rates of dynamic adjustment and substitution possibilities we conclude that the poor performance of the dynamic translog relative to the dynamic logit cannot be explained solely by dynamic model mis specification or the inclusion of price unresponsive non energy fuel use data our most robust empirical result is that coal and oil are substitutes

price and income elasticities of demand for passenger transport fuels in spain implications for public policies abstract the significant increase in passenger transport activity cars experienced by spain and its associated increase in energy consumption have several associated negative aspects including a greater dependence on foreign energy sources and higher ghg emissions therefore reducing the level of transport activity would bring important socioeconomic and environmental benefits the aim of this paper which focuses on energy consumption in the passenger transport is fourfold 1 to provide a diagnostic of energy consumption in the spanish passenger transport system and the related problems 2 to develop a model to calculate price and income elasticities of demand for transport fuel 3 to apply this model to the spanish passenger transport sector 4 to infer policy recommendations derived from the results of the diagnostic and the model it is claimed that in view of those low price elasticities and high income elasticities and if a reduction in the scale of transport activity is deemed socially desirable a combination of instruments is necessary fuel taxes play an important role within this combination apart from their long term effects the low price elasticity of demand for transport fuel would allow the collection of a significant amount of revenues which could eventually be earmarked to encourage reductions in private transport demand and modal shifts with other instruments

an econometric study of tourism demand the aids model of us and european tourism in mediterranean countries the almost ideal demand system aids model was used to estimate tourism expenditure allocation by us and west european countries among a range of mediterranean destinations the approach has the advantage of an explicit basis in consumer expenditure theory and by modelling the changes in the budget shares of expenditure among destinations provides new information relative to that provided by the traditional single equation approach the estimated model was econometrically satisfactory although symmetry and homogeneity were rejected in line with the findings of past studies of consumer demand the expenditure elasticities demonstrated considerable differences in tourism demand preferences between origin countries and between traditional and newly developing destinations the own and cross price elasticities indicated the importance of effective prices in determining the allocation of expenditure among destinations

testing short run factor demand models in canadian and u s agriculture equilibrium factor demand models are being replaced by a variety of short run and dynamic models in empirical production research in this paper the authors provide evidence on the usefulness of short run production models in aggregate canadian and american agriculture from 1961 to 1982 they offer an alternative data based dynamic model which encompasses the short run model this permits them to test for the short run models and for two simple dynamic models in favor of their most general dynamic model

weak separability and the estimation of elasticities in multistage demand systems the necessary conditions for multistage budgeting to be at least approximately justified are reviewed and the plausibility of these assumptions i e weak separability and low variability of price indices with utility level are discussed using no further assumptions simple relationships between expenditure and price elasticities in different budgeting levels are derived these results are applied to a three stage model for swedish food consumption and it is shown that the assumptions are not inappropriate restricting the analysis to the last stage of a multistage budgeting process is also shown to lead to considerable errors which could well have policy consequences

conditional and unconditional food demand elasticities in a dynamic multistage demand system this paper estimates conditional and unconditional demand elasticities in a three stage analysis of consumer demand for food and non food items in greece a dynamic version of the aids model is specified and estimated and full system misspecification tests applied correction formulas for price and expenditure elasticities are used to calculate unconditional elasticities from conditional demand sub systems all food items rank as price inelastic deviations between the calculated conditional and unconditional price and expenditure elasticities are found to be significant demonstrating the importance of correcting conditional elasticities before they can be used for policy purposes or welfare analyses

imperfect information and staggered price setting many keynesian macroeconomic models are based on the assumption that firms change prices at different times this paper presents an explanation for this staggered price setting the authors develop a model in which firms have imperfect knowledge of the current state of the economy and gain information by observing the prices set by others this gives each firm an incentive to set its price shortly after other firms set theirs staggering can be the equilibrium outcome in addition the information gains can make staggering socially optimal even though it increases aggregate fluctuations copyright 1988 by american economic association

a test of the habit formation hypothesis using household data numerous studies have confirmed the importance of habit formation as represented by a lagged dependent variable in demand analysis although all work to date has been based on aggregate time series data this study uses household level bls interview panel data to test the habit hypothesis an interrelated demand system for seventeen goods is estimated from cross section data and compared with a similar system based on time series data the results show that the habit component is significantly different between the two data sets and much smaller in the cross section data habit effects while not as large in cross section data as time series are still highly significant several explanations are offered concerning why the two sets of estimates differ copyright 1991 by mit press

willingness to pay and price elasticities of demand for energy efficient appliances combining the hedonic approach and demand systems abstract this article proposes a combined approach for estimating willingness to pay for the attributes represented by energy efficiency labels and providing reliable price elasticities of demand own and cross for close substitutes e g those with low energy efficiency and those with higher energy efficiency this is done by using the results of the hedonic approach together with the quantity based demand system qbds model the elasticity results obtained with the latter are then compared with those simulated using the linear almost ideal demand system la aids the methodology is applied to the dishwasher market in spain it is found that 15 6 of the final price is actually paid for the energy efficiency attribute this accounts for about 80 of the average market price the elasticity results confirm that energy efficient appliances are more price elastic than regular ones

the genesis of inflation and the costs of disinflation this essay asks how high inflation arises and why it is costly to eliminate specifically the paper discusses the roles of price rigidity and credibility problems in explaining the costs of disinflation the puzzle of persistent inflation triggered by onetime macroeconomic shocks and the case for returning to adaptive expectations in theories of inflation this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

a complete characterization of optimal growth paths in an aggregated model with a non concave production function the convexity of technology has played a crucial role in economic analyses of optimal one sector growth problems for example two of the key results on the traditional model of ramsey 1928 that have relied on the convexity of the technology are that optimal intertemporal growth involves moving monotonically towards a unique steady state as in cass 1965 koopmans 1965 and that the value function is a concave differentiable function of the initial capital stock as in benveniste and scheinkman 1979

decomposition analysis of consumers demand changes an application to greek consumption data a decomposition analysis for consumer demand functions is developed changes in marshallian demand or expenditure shares functions over time are decomposed into a total substitution effect an income effect and a habit effect this framework is applied to post war greek consumption patterns through a habit persistence version of the quadratic almost ideal demand system quaids it is found that for all commodity categories i e food beverages and tobacco footwear and clothing settling and housing and others the income effect was the main driving force in explaining changes in both quantity demanded and expenditure shares followed by habit and total substitution effects

an investigation into the demand for alcoholic beverages in canada a choice between the almost ideal and the rotterdam models in this article i investigate the historical pattern of interactions in the demand for three categories of alcoholic beverages in canada using both the differential almost ideal and the differential rotterdam demand systems i evaluate these models based on several decision criteria including model encompassment based on the j test structural stability conformity with demand theory and the credibility of the estimated price and income responses in an attempt to determine which of these models is better suited for explaining the demand for alcoholic beverages the results reveal that both models satisfy the restrictions of demand theory and of structural stability but the rotterdam model is preferable on grounds of the remaining two criteria

time varying intercepts and equilibrium analysis an extension of the dynamic almost ideal demand model demographic effects and user costs in demand systems have usually been modelled explicitly a more robust approach is a state space formulation of the demand system where time varying intercepts account for the effects of unobservable variables the author embeds such a system in a vector autoregressive distributed lag model with a bayesian hierarchical prior the model is estimated by a markov chain monte carlo method on samples involving quarterly us and uk data in the us case the results are compared with a previously published cointegration analysis of the same data copyright 2002 john wiley sons ltd

habit formation and demand for sugar sweetened beverages using scanner data we estimated demand for nine nonalcoholic beverages under habit formation we found strong evidence for habit formation although demand for sugar sweetened beverages by low income households is less elastic to own price changes compared with high income households there is evidence that high income households consider beverages to be more substitutable than low income households do a half cent per ounce tax on store purchased sugar sweetened beverages will result in a moderate reduction in consumption of sugar sweetened beverages for both income strata because of habit formation long run national tax revenue from a sugar sweetened beverage tax is about 15 to 20 lower than short run revenue

interrelated factor demands from dynamic cost functions an application to the non energy business sector of the uk economy in this paper we propose a dynamic cost function which allows us consistently to derive a set of dynamic interrelated factor demand equations in the general error correction form introduced by anderson and blundell 1982 this paper expands results recently published in urga 1996 it shows that the derivation of an effective underlying cost function allows us to identify the full set of parameters of the underlying process this does not happen in the standard anderson blundell formulation we report an empirical exercise used to model the so called supply side of the london busines school large scale economic model where we estimate both the set of factor demands and the underlying dynamic cost function for the non energy business sector of the uk economy

empirical modelling of the aggregation error in the representative consumer model this paper examines different approaches to modelling the aggregation error associated with the representative consumer model each approach is based on an analytical framework intended for modelling aggregate time series data on quantities and prices with potential additional measures of income distribution simple functions that track aggregation error over time are found to perform better than more complex and theoretically sophisticated models an explanation is given based on typical time series characteristics of economic data

an inverse demand analysis with introduction of quality effects an application to spanish consumption of fruit and vegetables this article analyzes consumer preference for fruit and vegetables when by using time series with socioeconomic characteristics of households there can be seemingly unobserved quality effects which are increased by aggregation the changes in spanish demand for fresh and processed fruit and vegetables over the period 1987 2000 are discussed following previous tests and analyses quantities are taken as predetermined and prices as matching the offer conditions thus quality effects based on the nutritional and or health value of the product are estimated from the error terms associated with the functions of the unit values quality variables are introduced as taste shifters in the inverse demand system laitinen theil model the results show the positive effects of quality differences on the normalized price for the group of products through own quality flexibilities and the negative effects between fresh and processed products through cross quality flexibilities

a flexible dynamic model of multiproduct technology for the west german economy this paper tests symmetry and negativity of the slutsky matrix for a system of demand functions derived from an aggregate model of multi product technology within a flexible dynamic framework the model considers three inputs and three outputs including imports and exports of intermediate goods we derive a static demand model from a trans log cost function and specify the data generation process by a stationary arx 1 1 model results based on west german quarterly data indicate that the integrability conditions are not rejected when imposed on the arx 1 1 model whereas they are rejected for all the less general dynamic models considered

the role of theoretical restrictions in forecasting with inverse demand models in recent years the theoretical restrictions of consumer demand have been examined in post sample forecasting exercises however this work has uniformly ignored the concavity restrictions of consumer demand in this paper we evaluate a series of normalized quadratic inverse demand system nqids specifications using rolling windows and generating one to four step ahead forecasts to estimate the models eleven categories of south atlantic fish are used from 1980 through 2001 in addition to the nqids we also examine the forecasting performance of a purely time series model we find that the best predictions are achieved using a composite forecast

advertising in demand systems testing a galbraithian hypothesis in this paper we argue that the influence of advertising upon the inter product distribution of demand is a system wide phenomenon which is investigated better through a demand equation system rather than through single equation methods attention is focused upon a dynamic version of deaton muellbauer s aids model modified to include advertising terms within this framework using data on consumer s non durable expenditure in the uk we carry out a preliminary test of galbraith hypothesis that advertising may affect the composition of aggregate consumer demand

modelling substitution between domestic and outbound tourism in australia a system of equations approach this study uses a system of equations approach to model the substitution relationship between australian domestic and outbound tourism demand a new price variable based on relative ratios of purchasing power parity index is developed for the substitution analysis short run demand elasticities are calculated based on the estimated error correction almost ideal demand systems the empirical results reveal significant substitution relationships between australian domestic tourism and outbound travel to asia the uk and the us this study provides scientific support for necessary policy considerations to promote domestic tourism further

errata aggregation distribution and dynamics in the linear and quadratic expenditure systems using canadian data 1965 86 the author confirms and extends thomas m stoker s 1986 results on the rule of distributional effects in demand systems the confirmation consists of evidence from the linear expenditure system model showing that distributional effects are statistically significant and can displace ar 1 dynamics in the disturbances the extension is made to the quadratic expenditure system model and an argument is advanced that standard habit formation dynamics may reflect omitted distributional effects the evidence supports this conjecture this suggests that the author may have been drawing the wrong conclusions from expenditure studies rather than inferring dynamic behavior he should have been concluding that these models are misspecified copyright 1992 by mit press

an analysis of the disaggregated manufacturing exports of the asian nies to eec usa and japan this paper examines the export performance of the four asian newly industrialized economics nies by modelling their bilateral export flows to three main oecd blocks the usa japan and the european community our estimated export demand models reveal interesting asymmetries between these three areas of destination which do not emerge from previous aggregate empirical studies of nie export performance

habit seasonality and time aggregation in consumer behaviour habitual behaviour in consumer demand analysis is generally portrayed via some form of a lagged dependent variable model the purpose of this paper is to explore the implications for habit behaviour of time aggregation this is done by specifying both habit and seasonal components in demand relations the results indicate that much of what has traditionally been identified as habitual behaviour is in fact seasonal effects

testing dynamic specification of factor demand equations for u s manufacturing this paper addresses the question of dynamic specification of empirical models of factor demand for annual u s manufacturing data from 1947 to 1981 frequently used models that treat a subset of factors as variable are shown to be misspecified an error correction model is considered as an alternative specification this model is shown to dominate several more parsimonious models in several respects however like the other models considered the error correction model is unable to generate satisfactory estimates of long run elasticities the issue of dynamic specification remains unresolved copyright 1992 by mit press

testing restrictions on a model of japanese meat demand tests for quasi separability net substitutability and perfect substitutability are developed and implemented on an almost ideal demand system model of the japanese meat sector the data set satisfies both symmetry and homogeneity there is evidence of net complimentarity between chicken and dairy beef and chicken and pork the tests indicate that japanese wagyu beef is considered a separate commodity to both imported beef and dairy beef the results also indicate that fish can be treated as separable in the japanese meat demand system

the estimation and testing of a system of demand equations for the uk this paper examines the results of estimating and testing a system of demand equations for the uk using quarterly data for the period 1955 69 variations in the results of other authors when testing demand restrictions are discussed a number of test statistics are employed to test the symmetry restrictions all of which lead to emphatic rejection possible explanations for conflict in the results of testing demand restrictions are examined

testing whether unemployment represents intertemporal labour supply behaviour in the lucas rapping 1969 model of the labour market fluctuations in unemployment represent individuals optimally adjusting their labour supply behaviour in response to fluctuations in wage rates over the business cycle in this paper i propose and implement a misspecification test of the lucas rapping treatment of unemployment as labour supply behaviour using panel data this test extends previous such work with micro data by simultaneously allowing for intertemporal substitution uncertainty and endogenous unemployment using the standard specification of intertemporal labour supply behaviour i find strong evidence against this interpretation of unemployment there are two possible interpretations of the test results the first is that it is necessary to turn to alternative models of the labour market in which unemployed workers are off a supply function the second is that the test results indicate the necessity of moving to more complex models of intertemporal substitution however given current econometric techniques and data sets these alternative models of intertemporal substitution will be extremely difficult to test

evaluating the linearized almost ideal demand system linearizing the almost ideal demand system laids by recourse to the stone share weighted price index is common practice two issues are addressed here first scrutiny of the errors in variables implications of the linearization reveals that not only is the sur estimator inconsistent but a consistent iv estimator cannot be constructed second some alternatives to the green alston elasticities specifically designed for the laids model are developed but neither these nor the green alston elasticities are found to have any advantages over the conventional elasticity formulae some errors in the green alston 1990 paper are corrected the inconsistency and elasticity issues are documented by a monte carlo investigation

a monthly dynamic consumer expenditure system for germany with different kinds of households a dynamic monthly consumer expenditure system is estimated for an aggregate household and three household types using recent german data the results tend to support the long run restrictions of homogeneity and symmetry for the aggregate household but only when short run dynamics are modelled following the method of anderson and blundell the required lags are short however the results for the partiallydisaggregated data are markedly different in particular the integrability restrictions can be rejected for the sample of high income workers therefore contrary to the usual presumption the less aggregated data seem more at variance with the restrictions of utility maximization

estimating consumer demand in korea abstract in this paper time series annual data on five consumer goods for korea are analyzed using the neoclassical model of consumer behavior the approach taken is the indirect utility function and employs a translog form various restrictive specifications of consumer preferences with respect to homotheticity and separability are examined and rejected by the likelihood ratio test income and price elasticities are estimated which appear to be generally high relative to those of developed countries growth in real income is primarily responsible for changes in commodity demand marginal utilities of income and associated income elasticities are calculated which are consistent with normal expectations

an almost ideal demand system incorporating habits an analysis of expenditures on food and aggregate commodity groups breusch t s and a r pagan the lagrange multiplier test and its applications to model specification in econometrics the review of economic studies 47 jan 1980 239 254 eden benjamin the insurance buying gambler economic inquiry 18 july 1980 504 508 henderson charles f estimation of variance and covariance components biometrics 9 june 1953 226 252 hill daniel h deborah a ott lester d taylor and james m walker incentive payments in time of day electricity pricing experiments the arizona experiment this review 65 feb 1983 59 65 maddala g s and t d mount a comparative study of alternative estimators for variance components models used in econometric applications journal of the american statisticalassociation 68 june 1973 324 328 selby e b and w beranek sweepstakes contests analysis strategies and survey american economic review 71 mar 1981 189 195 spence michael and richard zeckhauser the effect of the timing of consumption decisions and the resolution of lotteries on the choice of lotteries econometrica 40 mar 1972 401 403 wallace thomas d and ashiq hussain the use of error components models in combining cross section with time series data econometrica 37 jan 1969 55 72 winett richard a and michael t nietzel behavioral ecology contingency management of consumer energy use american journal of community psychology 3 june 1975 123 133