interest rates and money in the measurement of monetary policy over the last 25 years a set of influential studies has placed interest rates at the heart of analyses that interpret and evaluate monetary policies in light of this work the federal reserve s recent policy of quantitative easing with its goal of affecting the supply of liquid assets appears to be a radical break from standard practice alternatively one could posit that the monetary aggregates when measured properly never lost their ability to explain aggregate fluctuations and for this reason represent an important omission from standard models and policy discussions in this context the new policy initiatives can be characterized simply as conventional attempts to increase money growth this view is supported by evidence that superlative divisia measures of money often help in forecasting movements in key macroeconomic variables moreover the statistical fit of a structural vector autoregression deteriorates significantly if such measures of money are excluded when identifying monetary

limited commitment and the demand for money understanding money demand is important for our comprehension of macroeconomics and monetary policy its instability has made this a challenge common explications for the instability are financial regulations and financial innovations that shift the money demand function we provide a complementary view by showing that a model where borrowers have limited commitment can significantly improve the fit between the theoretical money demand function and the data limited commitment can also explain why the ratio of credit to m1 is currently so low despite that nominal interest rates are at their lowest recorded levels this article is protected by copyright all rights reserved

household demand in rural china a two stage les aids model a complete demand system of chinese rural households is estimated using a two stage les aids model and pooled provincial and time series data from 1982 to 1990 for commodity groups food clothing fuel housing and other commodities demand is price inelastic housing and other commodities are luxury goods while clothing and food are necessities within the food group price elasticities range from 0 005 to 0 63 expenditure elasticities are lower for grains and higher for meat tobacco and alcohol the results imply a gap between food demand and supply growth therefore china will face pressure to import food

the inflation tax in a real business cycle model money is incorporated into a real business cycle model using a cash in advance constraint the model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money in addition the welfare cost of the inflation tax is measured and the steady state properties of high and low inflation economies are compared

population dynamics and consumer demand the authors analyze the effects on consumption in the united states of 11 demographic variables including regional location and the urban rural base of the household its age size race sex and marital characteristics and the education and the employment status of the household head and the spouse data are from the 1972 1973 consumer expenditure survey the expenditure functions are first specified followed by descriptions of the data sources and the empirical estimates of expenditure functions for various items of consumption spending excerpt

environmental policy under oligopoly with endogenous market structure emission taxes under both fixed number oligopoly and endogenous market structure which are the most relevant market structures for policy issues are examined in the latter case and contrary to what is expected under imperfect competition the optimal tax could exceed marginal external damages which implies that externalities generated by oligopolistic firms could be optimally controlled by overinternalizing environmental damages under endogenous market structure a scheme consisting of a license fee and a second best underinternalizing emission tax can increase social welfare as compared to the use of a single emission tax exceeding marginal damages copyright 1995 by the editors of the scandinavian journal of economics

asymmetric information signaling and environmental taxes in oligopoly abstract this paper examines the effects of signaling on environmental taxation in a two period oligopoly model in which each firm privately knows whether its technology is clean or dirty while third parties the rival firms and the regulator have only a subjective perception about this fact consequently there are both horizontal and vertical asymmetric information and each firm can strategically manipulate both the competitor s and the regulator s priors in this context we find that each firm wishes to be perceived as a technologically clean firm in period 2 whenever the regulator s ecological conscience is sufficiently high we also show that taxes under symmetric information are always positive but under asymmetric information and signaling they may be negative subsidies and lower or greater than in the symmetric information case depending on the ecological conscience of the regulator and the probability of firms being dirty finally taxes are below environmental marginal damage both under symmetric and asymmetric information and signaling reinforces such under taxation

a generalization of working s model abstract working s 1943 model states that budget shares are linear functions of the logarithm of income it implies constant differences between corresponding marginal and budget shares a one parameter generalization is proposed which allows each marginal share to be a linear function of the corresponding budget share this model can be further extended with one extra parameter so that all goods are either specific substitutes or specific complements

taxing variable cost environmental regulation as industrial policy abstract conventional wisdom has it that a country that enacts strict environmental regulations will place its firms at a competitive disadvantage this view has been challenged recently some commentators argue that stricter regulation will enhance domestic competitiveness strict regulations induce innovation we evaluate this argument in a strategic trade model in very special cases a strengthening of regulation may result in a shift of profits from foreign to domestic firms this is not a general result however environmental regulation should of course be imposed to control externalities but it is unlikely that it will serve to generate industrial advantage

measurement matters recent results from monetary economics reexamined inferences about the effects of money on economic activity may depend importantly on the choice of a monetary index because simple sum aggregates cannot internalize pure substitution effects this hypothesis is investigated by replicating five recent studies that have challenged an aspect of the conventional wisdom about the effects of money on aggregate activity in four of the five cases the qualitative inference in the original study is reversed when a simple sum monetary aggregate is replaced by a divisia index of the same asset collection the results are mixed in the fifth case

multiproduct firms and environmental policy coordination the literature that analyzes the coordination of environmental taxes by governments considers that firms produce a single good at a single plant however in practice firms tend to produce several goods at various production plants multiproduct firms these firms may organize themselves in a centralized or decentralized fashion for purposes of decision making this affects their output and pollution levels this paper sets out to analyze the coordination of environmental taxes considering multiproduct firms we find that the organizational structure chosen by the owners of the firms depends on whether or not governments coordinate with one another in setting taxes and on whether the goods produced are substitutes or complements social welfare is greater if a supranational authority sets taxes in all countries in this case joint welfare is never lower if the authority is constrained to set the same tax in all countries

a micro analysis of business travel demand this study tests two hypothesis 1 that tax deductibility and the dual benefit nature of goods on the business pleasure borderline increases the demand for business travel and 2 that this dual benefit decreases price elasticity the study uses expenditure microdata and contrasts the behaviour of business travellers and pleasure travellers both groups are assumed to have indentical tastes but the expenditure behaviour of business travellers is modified by the role of the business trip as a factor of production the linear expenditure system les allocation model is applied to expenditures on individual goods at a particular tourist destination business travellers are shown to have higher expenditures than pleasure travellers for food lodging and local transportation minimum quantities estimated by the les are also higher for business travellers uncompensated price elasticities of business travellers are significantly smaller than that of pleasure travellers for local transportation clothing a

a household production specification of demographic variables in demand analysis empirical investigations into the expenditure and time allocation decisions of households usually allow the variation in demographic characteristics across households in particular the number and ages of dependent children to affect these decisions the motivation for allowing such demographic effects is two fold first it permits the researcher to pool observations from households with differing demographic characteristics secondly it has been argued that it allows the researcher to construct an index normally called an equivalence scale to show the full income required by a household with some given composition to attain the same level of utility as some reference household and hence permits comparisons of welfare levels across households there are two areas of controversy surrounding this literature which directly relate to its two sources of motivation first what is the appropriate demographic specification second can the estimated parameters be used to undertake welfare comparisons a series of demand studies including barten 1964 blundell 1980 blundell and walker 1982 gorman 1976 muellbauer 1974 1977 hurd and pencavel 1981 pollak and wales 1978 1981 and ray 1983 have attempted to answer the first problem by considering the current allocation of goods and in some cases household time conditional on demographic structure this literature treats demographic variables as exogenous whereas in contrast the neoclassical fertility literature see for example the contributions in schultz 1973 treats the numbers and ages of children as endogenous nonmarket goods within a lifecycle optimising framework the second problem has been raised by pollak and wales 1979 who argue convincingly whether household composition is the result of endogenous decisions or not it is impossible to compare the welfare of households with different compositions using the results of empirical demand analysis since market decisions do not reveal how the households feel about the presence or absence of children thus estimated equivalence scales are necessarily based on the households preferences conditional on their demographic compositions the object of this paper is to suggest a new approach to the problem of demographic specification and to show that this approach both highlights the problem of making welfare comparisons and at least in part resolves it

aggregate consumer behaviour and the measurement of inequality this paper presents an approach to inequality measurement based on an econometric model of aggregate consumer behaviour the novel feature of this model is that systems of individual demand functions can be recovered uniquely from the system of aggregate demand functions we present methods for evaluating social welfare based on an explicit social welfare function this social welfare function incorporates measures of individual welfare based on indirect utility functions for all consumer units we develop indexes of inequality based on actual and potential levels of social welfare

monetary aggregates and output series title working paper frb title monetary aggregates and output date publication federal reserve bank of cleveland working paper no 9813 author s scott freeman finn kydland type working paper frb topics s us economy

household food demand in rural china this article explores rural household food consumption behaviour in china using a large household data set from jilin province data are classified into four main food groups grain vegetable products animal products and other foods a household food demand system incorporating four household characteristics is estimated using an la aids model assuming a three stage budgeting procedure expenditure elasticities for a range of food groups are estimated with a particular focus on animal products the inclusion of household characteristics did not have a big impact on the elasticity values in any of the three stages of the budgeting process the total expenditure elasticity for grain stage ii was 0 64 suggesting substantial future growth in household demand for fine grains such as rice and wheat as per capita incomes continue to grow in rural areas the highest conditional and total expenditure elasticity values were for the animal products stage ii group 1 22 and 0 76 respectively within this

an emprical model of the demand for a varied diet this study attempts to measure some aspects of the household s demand for a varied die by invesigaing how he number of individual foods consumed b he household is affeced b is preferences and food expendiure a heoriical model suggesed b household production theory is adopted to empirical data from a cross section of households it is found that the number of individual foods consumed is strongly responsive to househjold expenditure on all foods

the efficiency of demand oriented housing programs generalizing from experimental findings typical production oriented housing programs offer potential recipients a highly limited set of previously unattainable commodity bundles from the household s viewpoint such programs have been highly inefficient from society s viewpoint such housing programs are generally horizontally inequitable and inefficient given that housing programs are not likely to be fully cashed out and incorporated into general income maintenance could housing programs be restructured to increase their efficiency this paper examines this question results indicate that demand oriented housing programs are substantially more efficient than are production oriented programs in fact in the aggregate the former programs approach unrestricted cash payments in their transfer efficiency

demand function estimation and the law of one price this paper shows that the method of estimating of demand functions may contain an erroneous implicit assumption when aggregated data are used this assumption revealed by the choice of regressors yields estimates of own price elasticity and other coefficients that are inconsistent it can also cause heteroscedasticity in the second stage of two stage least squares estimation where none would otherwise exist

modelling demand systems with demographic effects based on the modifying function approach abstract we follow review of economic studies 52 1985 1 approach to modify the standard consumer demand theory so that socio demographic variables can be formally incorporated into the demand systems our modified theory not only includes all previous approaches to this problem as special cases but also allows the useful interpretations of household production and subsistence expenditure

on using linear regressions in welfare economics this article consists of two parts the first part shows that the ordinary least squares regression coefficient is a weighted average of slopes between adjacent sample points when applied to a linear regression with income as the independent variable the regression coefficient depends heavily on the slopes of high income groups the weight of the highest income decile may well exceed that of the other nine deciles this may be undesirable especially if the regression is used for welfare analysis because the marginal propensities to consume attributed to the commodities are determined by the high income groups the second part of the article proposes alternative estimators the extended gini estimators that enable investigators to control the weighting scheme and to incorporate their social views into the weighting scheme of the estimators

the demand for site specific recreational activities a characteristics approach abstract a model of constrained utility maximizing behavior is developed to explain how a representative individual allocates his ski days among alternative sites the physical characteristics of the ski areas and the individual s skiing ability are explicit arguments in the utility function the budget allocation is given along with the parametric costs to ski including travel costs entrance fees equipment costs and the opportunity cost of his time shares a site s share being the proportion of ski days that the individual spends at that site are derived and assumed multinomially distributed a stochastic specification which maintains the inherent properties of the shares maximum likelihood estimation confirms the basic hypothesis that costs ability and characteristics all are important determinants of the sites shares the model explains a large proportion of the skier s allocation of ski days a multinomial logit model of skier behavior is also developed and maximum likelihood estimates of its parameters are obtained examination of the summary statistics from my model and the logit model indicates that my model predicts the skier s choice of sites better than the logit model

engel curves and systems of demand functions abstract the functional forms of the engel curves implied by several popular complete systems of demand functions are discussed among the systems are those generated by generalized quadratic indirect utility the translog system the generalized leontief system etc the linear and quadratic expenditure systems and deaton and muellbauer s pigl and aids a new system which can produce the engel curves of all these systems as special cases is suggested the different engel curves are tested against data from a norwegian survey of consumer expenditure this is done both in a complete system of engel curves for eight commodities and commodity by commodity

the welfare effects of disarmament on the united states under nato and the warsaw pact this paper develops a model of disarmament by incorporating rationing theory into the economic theory of alliance in order to provide an econometric measure of welfare gain from a disarmament treaty the author employs the cost functions predicated on rationed and unrationed demand systems by combining the economic theory of foreign aid with that of alliance the author examines the impact of disarmament on the developed economies foreign aid to developing countries as a peace dividend the model is applied to the case of the u s economy under mutual disarmament between nato and the warsaw pact copyright 1996 by mit press

the testing and estimation of complete demand systems on household budget surveys a recent demand system aids is extended to include family size explicitly and then estimated on indian budget data the estimation using non linear fiml is performed first on pure time series and then on pooled cross section data within and across equation restrictions are imposed and tested the principal results include u a significant price and family size effects on the budget share of an item b sensitivity of test results on homogeneity and symmetry to i rural urban data ii time series cross section and iii inclusion omission of family size c considerable difference between pure time series and pooled cross section estimates and d difference between the expenditure responses of the rural and urban consumer

estimation of a complete system of nonlinear engel curves further evidence from box cox engel curves for sri lanka the specification and estimation of engle curves has drawn much attention over many years since the earliest attempt of working 1943 among the many approaches a complete system of engel curves stood out as more appealing as it explicitly imposes the important budget constraint in the allocation of family budgets further extended researches were undertaken on nonlinear specifications as they are likely to produce results that are closer to the reality than the linear systems beneito 2003 attempted box cox form of nonlinear specification but ended up estimating a set of linear equations using seemingly unrelated regression equations method the present research extends the previous work on engle curves in two ways first by incorporating key demographic characteristics into the determination of expenditures in the specification of the box cox form of nonlinear system and second by using primary micro data from large household surveys to estimate the system by nonlinear estimation methods our esti

distinguished fellow houthakker s contributions to economics h t endrik houthakker s contributions to economics defy capsule description a better strategy than providing abstracts of the books and articles on his long and impressive vita is discussing one or two topics in detail placing at least some of his contributions in perspective and discussing their relevance for current research the first topic i have chosen revealed preference needs no justification houthakker made his professional reputation with his 1950 economica article on revealed preference theory the article that introduced the strong axiom of revealed preference the second topic is the dynamics of demand a more idiosyncratic choice which reflects both the importance of houthakker s contributions and my own interests the dynamics of demand is an appropriate choice not only because demand analysis has been a major recurrent theme in houthakker s work but also because like so much of his work it is at the interface between theoretical and empirical analysis houthakker has coauthored two important and influential books on demand analysis the analysis of family budgets 1955 1971 with s j prais and consumer demand in the united states 1966 1970 with lester d taylor and has written as they say numerous articles his 1961 econometrica survey article the present state of consumption theory is a classic a durable and prescient article that foresaw and influenced the developments in demand analysis during the next decades other economists would have chosen different topics thereby revealing different preferences some would choose his work in international economics energy eco

recovering individual preferences for non market goods a collective travel cost model traditional recreation demand models do not make a distinction between a household and an individual as the reference decision making unit thus assuming that a family maximizes a single utility function even if the family consists of different individuals such models ignore the possibility of family members divergent preferences for non market goods this study proposes a novel approach the collective travel cost model ctcm to eliciting individual preferences for a non market good such as a recreation site by using revealed preference data this approach accounts for the intra household resource allocation and the role of each household member s preferences we show that the collective travel cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non market goods such as the willingness to pay to access a recreation site we find that how resources are distributed within the household reflects significant differences in welfare measures

linear household technologies this paper discusses estimates and formally compares the best known procedures for incorporating demographic variables into complete demand systems in particular a class of general procedures belonging to gorman s family of general linear household technologies is introduced estimation and comparison of different procedures make use of italian household budget data for the years 1973 1992 incorporating a single demographic variable family size into a generalized quadratic almost ideal demand system in our empirical example however even the most general household technologies are unable to fully capture the behavioural heterogeneity shown by the data copyright 2000 john wiley sons ltd

energy consumption in australia evidence from a generalized working model abstract the paper reports an application of the generalized working model as proposed by laitinen theil raparla 1981 to australian household expenditure data to obtain estimates of income elasticities for four types of energy electricity gas other fuels and petrol the evidence indicates some gain in the laitinen theil raparla model but this gain is insufficient in terms of the atkinson 1973 test to significantly discriminate it from the linear expenditure system

household demand for convenience and nonconvenience foods states the budget shares are generally more responsive to prices than to real total expenditure additionally the quantities demanded of convenience and nonconvenience foods are generally more sensitive to changes in income and own prices than to changes in cross prices with regard to demographic variates primary users of convenience foods are white households with employed household managers less than 35 years of age

vertical structure and strategic environmental trade policy abstract the idea that environmental trade policy can be used to achieve competitive advantage in international markets has important implications for the way we conceive free trade this paper considers strategic environmental policy in a model that makes explicit the vertical structure that supports production of the traded good including intranational vertical relationships in the analysis of strategic environmental trade policy has substantial qualitative effects when vertical contracts are allowed the optimal policy to levy on a polluting input under both quantity and price competition in the international market is the pigouvian tax

consumption preferences structure of greek households the alternative engel s curves have already been used as a classical method for the analysis of household budgets engel s equations have been used to derived income elasticities for a system of four types of commodities besides the income and its effects there are many other socio economic characteristics which influence the consumption of commodities especially for energy socio economic characteristics have a great influence on consumption a principal components analysis method is used for the investigation of the influence household characteristics have on consumer preferences the residuals from the income influence are analysed in principal components the aim of this analysis is to reveal the preference structure of greek households as well as the correlation of this structure with the different socioeconomic characteristics

a cross country tabulation of own price elasticities of demand abstract this paper tabulates frisch slutsky and cournot own price elasticities for each of 10 goods at the per capita real income levels of 30 countries ranging from india to the united states

optimal pollution taxation in a cournot duopoly it is well known that the optimal pollution tax in a competitive industry is equal to the marginal damage inflicted by the pollution it has also been shown that the optimal pollution tax on a monopoly is less than the marginal damage in this paper i derive the optimal pollution tax for a cournot duopoly if firms have different production costs the optimal tax rate may exceed the marginal damage this is so because the tax may be an effective instrument for allocating production from the less to the more efficient firm it is also shown that if one firm has a positive most preferred pollution tax the sum of consumer and producer surpluses will be declining in the tax at this level

pollution taxes and pollution abatement in an oligopoly supergame abstract this paper investigates the effects of an emissions tax on the incentives for oligopolists to acquire alternative pollution abatement technologies the analysis is conducted in terms of a repeated game and it is demonstrated that there are circumstances in which the firms may reject the option of acquiring the pollution abatement equipment even when this lowers their production costs

fiscal and spending behavior of local governments identification of price effects when prices are not observed this paper analyzes local public fiscal andspending behavior in a setting where localgovernments represented by the dominantparty or coalition are treated as utilitymaximizing agents the econometricanalysis which is based on a modifiedversion of eles recognizes total spendingas well as total income as endogenousvariables identification of the priceeffects is achieved by utilizing data onenvironmental cost factors and localtastes the performance of the estimatedmodel is investigated by testing itsability to make out of sample predictionsof local government behavior

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

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

green recovery policies for the covid 19 crisis modelling the impact on the economy and greenhouse gas emissions the covid 19 pandemic induces the worst economic downturn since the second world war requiring governments to design large scale recovery plans to overcome this crisis this paper quantitatively assesses the potential of government investments in eco friendly construction projects to boost the economy and simultaneously realise environmental gains through reduced energy consumption and related greenhouse gas emissions the analysis uses a computable general equilibrium model that examines the macroeconomic impact of the covid 19 crisis in a small open economy belgium subsequently the impact of the proposed policy is assessed through comparative analysis for macroeconomic parameters as well as co2 equivalent emissions for four scenarios our findings demonstrate that the covid 19 pandemic damages economies considerably however the reduction in emissions is less than proportionate still well designed public policies can reverse this trend achieving both economic growth and a disproportionally large decrease in emissions moreover the positive effect of such a decoupling policy on gdp is even stronger during the pandemic than compared to the pre covid 19 period this is the result of a targeted investment induced green transition towards low energy intensive economic activities finally this paper describes how the net effect on the government budget is positive through the indirect gains of the economic uptake

pre commitment and flexibility abstract this paper considers several related strategic duopoly settings in which uncertainty creates an option value from retaining flexibility by delaying investment or output decisions until after uncertainty is resolved this value of flexibility must be weighed against the strategic value of pre commitment yielding a trade off between flexibility and pre commitment we obtain a simple characterization of the timing of output decisions as a consequence of the degree of uncertainty particular attention is paid to the implications for entry deterrence by an incumbent firm and to the possible flexibility enhancing effects of investment in capital

the own price of money and a new channel of monetary transmission traditionally the effects of monetary policy actions on output are thought to be transmitted via monetary or credit channels real business cycle theory by contrast highlights the role of real price changes as a source of revisions in spending and production decisions motivated by the desire to focus on the effects of price changes in the monetary transmission mechanism this paper incorporates a direct measure of the real own price of money into an estimated vector autoregression and a calibrated real business cycle model consistent with the rbc view of the monetary transmission mechanism both approaches reveal that movements in the own price of money are strongly related to movements in output

green tax reform in an oligopolistic industry oecd countries reduce or eliminate certain taxes when they introduce new environmental taxes the purpose of this paper is to analyze the incidence of such green tax reform in an oligopolistic industry the paper shows that a rise in taxes could result in the expansion of the aggregate pollution in the presence of a large technology gap the paper further shows that the government loses tax revenue as a result of the green tax reform if it continues to apply the same environmental standard this implies that the government needs to raise environmental standards to keep the existing level of public spending after a green tax reform

determinants of price elasticities for private labels and national brands of cheese an almost ideal demand system model is developed and used to estimate price elasticities for us cheese sold at retail growing consumption of cheese coupled with fierce competition between private labels and national brands serves as motivating factors for this study per capita consumption of cheese grew by 75 during 1980 2004 and private labels captured a rising share of this growth private labels today account for 35 of market share national brands for the remaining 65 kraft accounts for 45 of national brands but price increases for kraft brands led to a sizeable price gap between its brands and private labels this gap helped to stimulate growth of private labels marketing managers seek to capitalize on both growing cheese sales and price gaps for brands relevant information for marketing managers is consumer sensitivity to price changes this study uses 69 weeks of scanner data with consumers segmented by income levels to derive price elasticities for both lower and higher income consumer

determinants of food consumption in rural sierra leone abstract this paper reports the application of a quadratic expenditure system with demographic variables to the household consumption leisure choice component of a household firm model a system of seven commodities is estimated including five foods non food and leisure appropriate for such a level of disaggregation a demand system is used the quadratic expenditure system which allows for a flexible relationship between full income and commodity expenditures without sacrificing parsimony in parameters demographic data on households are explicitly incorporated into the model allowing for a richer specification than can be achieved by using per capita variables the data are from a cross section survey of households in rural sierra leone price variation exists by region permitting estimation of a complete demand system engel curves are found to be significantly non linear with marginal expenditure on rice the major staple declining with higher income most foods are found to be reasonably price responsive with sizeable own price substitution effects declining with higher income aggregate labor supply is found to be price inelastic

household labour supply with rationing in spain this paper provides new empirical evidence on household labour supply with rationing to that end we use the latest spanish data in order to estimate three flexible functional forms namely the nles the quadratic and the hausman ruud forms and calculate the income and wage elasticities we find that the number of dependants has a negative effect on the labour supply of the female moreover the north and the east spanish regions have a clearly positive effect on the labour supply of the female whilst the north has the same effect on that of the male the elasticities of three functional forms are very similar male labour supply is slightly decreasing with the wage whilst for the female it is increasing leisure is a normal good for both spouses as expected whilst the labour hours are net substitutes

price and income elasticities of residential energy demand in germany we apply a quadratic expenditure system to estimate price and expenditure elasticities of residential energy demand electricity and heating in germany using official expenditure data from 1993 to 2008 we estimate an expenditure elasticity for electricity of 0 3988 and of 0 4055 for space heating the own price elasticity for electricity is 0 4310 and 0 5008 in the case of space heating disaggregation of households by expenditure and demographic composition reveals that the behavioural response to energy price changes is weaker stronger for low income top income households there are considerable economies of scale in residential energy use but scale effects are not well approximated by the new oedc equivalence scale real increases in energy prices show a regressive pattern of incidence implying that the welfare consequences of direct energy taxation are larger for low income households the application of zero elasticities in assessments of welfare consequences of energy taxation strongly underestimates potential welfare effects the increase in inequality is 22 smaller when compared to the application of rich and disaggregated behavioural response patterns as estimated in this paper

fundamental similarities in consumer behaviour diversities and similarities in international consumption patterns are highlighted a large body of data is used to identify cross country consumption differences and to understand these in terms of the familiar utility maximizing framework in which observed differences in prices and incomes play the key role taken as a whole the results reveal a surprising degree of similarity in international consumption patterns and support the idea that tastes are constant at least with respect to broad commodity groups

functional form of engel curves for foodstuffs abstract employing individual household expenditure data for six foodstuffs we test five three parameter and four two parameter engel curves against a more general form all two parameter functions must be rejected including working s function it appears that a transformation of the budget share is in order to capture the observed curvature

carbon taxation and market structure a cge analysis for russia abstract russia is one of the world s major sources of carbon based energy as well as one its most intensive users introducing carbon taxes can lead to a reduction in emissions and encourage investment in energy efficiency we investigate the economic effects of carbon taxes on the russian economy under perfect competition and a cournot oligopoly in output markets the main findings are i substituting carbon taxes for labour taxes can yield a strong double dividend in russia however welfare gains strongly depend on the labour supply elasticity and elasticities of substitution between capital labour and energy ii under the assumption of a cournot oligopoly with homogenous products and symmetric firms in the markets for natural gas petroleum and chemical products metals and minerals welfare costs of the environmental tax reform can be higher than under perfect competition this is because introducing carbon taxes leads to a reduction in already sub optimal output thereby exacerbating pre existing distortions arising from imperfect competition iii furthermore increases in energy costs can result in higher mark ups in some markets because of less competition resulting from firms exit

a regional analysis of food consumption in spain abstract working s model of the engel curve is applied to food and staple food expenditures with two years spanish provincial data the functional form of working s model is tested against two other specifications and cannot be rejected the estimation results are quite comparable with those obtained by other authors we also find that spain has experienced a substantial change in the pattern of food consumption during the 1970s

upstream and downstream pollution taxations in vertically related markets with imperfect competition when two markets are vertically related the government can control pollution at the upstream as well as the downstream market levels this paper employs the stylized model of input price discrimination and compares the effectiveness of upstream and downstream pollution taxations we consider the situation in which downstream firms have heterogeneous abatement technologies and an upstream monopolist performs input price discrimination against them in order to mitigate pollution the government imposes input tax on the intermediate inputs and emission tax on the pollutant we show that the degree of input price discrimination decreases with a rise in the input tax and increases with a rise in the emission tax we further examine the effect of a green tax reform in which the government changes the source of taxation from input tax to emission tax we argue that although this green tax reform may reduce the tax revenue of the government it will certainly increase social welfare

environmental taxation and strategic commitment in duopoly models in this paper we address the issue of optimalenvironmental taxation under imperfect competition the problem is analysed for three different types ofduopoly models the cournot open and closed loopmodels and the stackelberg model we explicitlyanalyse the role of strategic behaviour each firm hasto make a choice of output level and of the level ofa strategic variable the choice of this strategicvariable affects both marginal cost and emissions wecompare the properties of these three duopoly models and derive and compare optimal environmental taxes weshow that whether the optimal tax is lower or higherthan marginal environmental costs depends on theinformation transmission and the effect of thestrategic variable on marginal costs in addition thedifferences in market shares and the influence of thetax on the cost structure play important roles indetermining optimal emission taxes

the effects of price aggregation bias in systems of demand equations this article illustrates the importance of maintaining consistent levels of aggregation between prices and quantities when estimating consumer demand functions the impact of violating this condition is quantified by using summary performance measures and estimates of demand elasticity biases results derived from an application of 1972 1973 consumer expenditure survey data and supported with a quasi monte carlo experiment consistently indicate that the point estimates of demand elasticities are significantly biased thus the study indicates the importance of developing and maintaining price indexes disaggregated to the same level as the expenditure data in consumer expenditure and budget surveys

a complete system of engel curves in the spanish economy the main goal of this article is the estimation of the consumption income relationship along with socio economic factors using cross section data from the spanish household expenditure survey 1991 the data has been grouped according to exogenous criteria to avoid the problem of null expenditure first a non linear system of equation is estimated from which the linear form that best fits the used data is tested finally income elasticities are calculated considering three alternative formulations depending on how an initial income increment is distributed among consumers income elasticities are shown for the whole income distribution

demographic effects in demand analysis estimation of the quadratic expenditure system using microdata the purpose of this paper is to estimate a complete theoretically plausible system of demand equations on microdata using the rich detail of these data to investigate the impact of demographic variables on demand behavior the system which we estimate is the quadratic expenditure system qes introduced by howe pollak and wales we evaluate four methods for incorporating demographic variables into the demand system three of these procedures imply parameter restrictions while the fourth does not tests on the restrictions imply that for our data unrestricted estimation yields significantly greater explanatory power

horizontal equity income taxation and self selection with an application to income tax credits abstract this paper investigates the relationship between utilitarianism and horizontal equity in models of income taxation in particular and self selection in general an example involving well behaved individual preferences is constructed in which a maximization of a utilitarian social welfare function leads via income taxation to horizontal inequities sufficient conditions for utilitarianism to bring horizontal equity are derived the results are applied to the question of whether income tax credits are an appropriate way to treat differences in family size

is there curvature in the slutsky matrix d o the poor substitute among commodities more flexibly than the rich when relative prices change even when compensated for the income effects of the price changes is it necessary to add a third dimension to the slutsky substitution matrix to identify household income in short do the terms of the slutsky elasticity matrix curve smoothly from poor households to rich households in such a way that equation 1 is meaningful

engel curves for fair trade consumption and development perspectives for producers evidence from data on real fairtrade purchases while fairtrade sales have exhibited two digit growth rates over recent decades their capacity to become large enough to generate substantial gains for producers is still uncertain estimating fai

food expenditures and household demographic composition in the us a demand systems approach food expenditures and subsistence quantities of poverty status and non poverty status us households are analysed within a linear expenditure system that postulates subsistence quantities to be linear combinations of demographic variables using the us bureau of labor statistics 1992 consumer expenditure survey and detailed monthly consumer price indices this article obtains expenditure elasticities own price elasticities and subsistence quantities for each income group across nine broadly aggregated food commodity groups elasticity estimates and subsistence quantity estimates differ across income groups supporting the premise that policies targeted at specific income groups should be based on the target group s elasticity estimates rather than average population elasticities parameter estimates are then used to simulate how subsistence quantities and own price elasticities can be expected to vary according to the demographic composition of the household within a specific income group

technological competition uncertainty and oligopoly abstract in an oligopoly context the present technological choice of a firm which expects to receive private revelant information just prior to the uncertain market stage has both a flexibility value and a strategic commitment value in contrast to some common wisdom ideas we provide a natural two stage competition framework in which an increase in uncertainty always raises the commitment value of the technological choice of the firm and may decrease its flexibility value when the increased uncertainty takes the form of more variable beliefs the first result tends to reinforce therefore the findings of the strategic commitment literature under certainty

local governments in kind transfers and economic inequality abstract we examine how in kind transfers provided by local governments affect economic inequality the allocation of in kind transfers to households and the adjustment for differences in needs are derived from a model of local government spending behavior the model distinguishes between fixed and variable costs in production as well as mandatory programmatic spending components versus discretionary spending on different service sectors and target groups to estimate the model we combine norwegian data from municipal accounts and administrative registers for the period 1982 2013 we find that economic inequality is considerably lower when taking in kind transfers into account while the poor benefit from receiving a relatively large share of public services the equalizing effect of in kind transfers tends to be smaller than the equalizing contribution from public cash transfers when examining the time trends in inequality we find that local governments attenuated the growth in cash income inequality by re allocating in kind transfers to low income families this reduction in inequality is mostly due to changes in spending priorities across service sectors and target groups while the contribution from re allocation of resources across municipalities is much smaller

carbon tax emission standards and carbon leak under price competition we consider a two country model of price competition with one polluting firm in each country and differentiated products assuming away to simplify abatement efforts and input substitution we compare the impact on output leakages and trade volumes of a carbon tax versus an emission standard policy unilaterally enacted by the home country under the tax the two firms set their prices simultaneously in a bertrand game under the standard the home firm s price is conditioned on the price of the foreign firm so as to abide the emission constraint as a result the tax leads to higher leakages and global emissions than the standard the standard also implies a better trade balance for the home country than the tax

the household s decision to accept or reject a conditional transfer offer households deemed by society to have insufficient resources to purchase an adequate commodity bundle are often offered aid i e additional resources conditional upon the households purchasing a given level of some commodity e g food fuel or housing such conditional transfers attempt to modify the households normal behavior i e if the households would normally purchase the required level of the designated commodity upon receipt of the transfer the constraint would not be necessary how these incentives and constraints interact to affect the households behavior determines in large part the number and type of eligibles aided by the program aggregate program costs given payment levels and the types of commodity bundles purchased by the recipient households clearly understanding the decision to accept or reject a conditional transfer offer has widespread implications for the costs of the transfer program the impact on eligible households and the attainment of society s objectives numerous studies have investigated the size and distribution of recipient benefits in conditional transfer programs 1 3 6 8 9 14 16 21 to this author s knowledge however no analysis has estimated a model of the household s decision to participate in a conditional transfer program using household data and a theoretically appropriate measure for the household s net gain to overcome this gap in our understanding of the household s

the efficiency of housing search previous research in the housing market has largely focused on housing market outcomes e g the quantity of housing services demanded or supplied or the determination of equilibrium prices scant attention has been directed at the processes producing these outcomes recently economists have developed models of buyer and seller search processes in housing markets 6 22 but almost no empirical testing of these models has been done the importance of search in economic markets has been discussed by lippman and mccall 15 the difficulties encountered by deterministic theories of economic markets in explaining different prices for identical commodities and persistent positive levels of unemployed resources are overcome when search is introduced search may be of even greater importance in housing markets than in most other economic markets housing generally accounts for the largest item of consumption for most households for homeowners housing is usually the household s largest asset housing is a heterogeneous commodity that is traded in highly decentralized markets 2 the costs of moving can be substantial reducing the gains from relocation the consumption of housing also involves externalities that add to the heterogeneity of the consumption bundle finally recent theoretical work by courant 6 suggests that the rational search behavior of households facing discrimination in housing markets might act to perpetuate adverse market conditions facing such households given the importance of housing as a consumption commodity and as an asset and the above characteristics of housing and housing markets previous descriptive examinations

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

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

equivalence scales horizontal equity and optimal taxation under utilitarianism abstract this paper analyzes the question of how differences in family size should be treated by the income tax system in order to achieve horizontal equity family size is incorporated into the demand system by the procedure of demographic scaling horizontal equity is defined as equal treatment of equals it is shown that when lump sum taxes are not available and the government has to rely on income taxation then the only way to entail equal utilities for household of different size is to equate the labor supplies and the per standard adult consumptions of these households

the estimation of marginal utility of income for application to agricultural policy analysis abstract a quality of life index qli a proxy measure of utility is constructed by factor weighted and simple summation weighted aggregation of socio psychological measures of well being the socio psychological measures were constructed from quality of life domains taken from selected years of the general social surveys general social surveys 1972 1993 cumulative code book principal investigator james a davis director and co principal investigator tom w smith chicago national opinion research center 1993 national data program for the social sciences series no 13 the quality of life indices qli indices are regressed on selected socio demographic variables using quadratic cobb douglas square root and semilog functional forms qli is much influenced by income education and health as measured here qli is not much influenced by year of measurement sector or by region of residence much variability in the qli is unique to individuals and our results are suited to predict group rather than individual well being practitioners computing the benefit cost ratio for a public program project or policy can weight dollars by income groups with marginal utilities derived from this study that methodology will matter even the conservative quadratic equation indicates that the marginal utility of income mui for families with very low incomes is half as large as for families with median incomes