zero expenditures and the estimation of engel curves over the brief interview periods typical of budget surveys such as the u k family expenditure survey households recorded expenditures are liable to be misleading indicators of their underlying consumption most starkly a household may not be observed to purchase commodities that it nevertheless consumes this paper considers the implications of such measurement errors for the estimation of demand systems and derives a consistent estimator for the special case of linear engel curves

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

distributional and efficiency impacts of increased us gasoline taxes we examine the impacts of increased us gasoline taxes in a model that links the markets for new used and scrapped vehicles and recognizes the consider able heterogeneity among households and cars household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled we find that each cent per gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0 2

household equivalence scales and interpersonal comparisons recent papers have used household equivalence scales to construct measures of welfare inequality this procedure rests on an often implicit value judgement namely that if after adjustment for demographic characteristics two households are on the same indifference curve they are equally well off that value judgement is not compelling and there are situations in which it is ethically repugnant this is particularly likely if tastes are functions of past experience and income

identifying supply and demand elasticities of agricultural commodities implications for the us ethanol mandate we present a new framework to identify supply elasticities of storable commodities where past shocks are used as exogenous price shifters in the agricultural context past yield shocks change inventory levels and futures prices of agricultural commodities we use our estimated elasticities to evaluate the impact of the 2009 renewable fuel standard on commodity prices quantities and food consumers surplus for the four basic staples corn rice soybeans and wheat prices increase 20 per cent if one third of commodities used to produce ethanol are recycled as feedstock with a positively skewed 95 percent confidence interval that ranges from 14 to 35 per cent jel q11 q16 q42 q48

non linearities and equivalence scales this paper focuses on the estimation and testing of equivalence scales in the context of a demand system with nonline ar logarithmic expenditure effects in its budget share equations the authors show that such nonlinearity enables one to identify the scal es without demographic separability restrictions on preferences and to avoid false rejection of the hypothesis that the scales are independ ent of the base utility level the empirical analysis is based on micro data drawn from the u k family expenditure survey copyright 1993 by royal economic society

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

the interpretation of instrumental variables estimators in simultaneous equations models with an application to the demand for fish in markets where prices are determined by the intersection of supply and demand curves standard identification results require the presence of instruments that shift one curve but not the other these results are typically presented in the context of linear models with fixed coefficients and additive residuals the first contribution of this paper is an investigation of the consequences of relaxing both the linearity and the additivity assumption for the interpretation of linear instrumental variables estimators without these assumptions the standard linear instrumental variables estimator identifies a weighted average of the derivative of the behavioural relationship of interest a second contribution is the formulation of critical identifying assumptions in terms of demand and supply at different prices and instruments rather than in terms of functional form specific residuals our approach to the simultaneous equations problem and the average derivative interpretation of instrumental variables estimates is illustrated by estimating the demand for fresh whiting at the fulton fish market strong and credible instruments for identification of this demand function are available in the form of weather conditions at sea

demographics and demand evaluation of alternative functional forms abstract we evaluate the role of functional form of demographics in demand analysis by proposing the gql unstructured demographically transformed model which nests the barten gorman demographically modified model and popular rank 3 and rank 2 demand systems we use uk individual data and find that the equivalence of the unstructured and barten gorman forms and identification of meaningful equivalence scales depend on the degree of flexibility of the demand system in demographic price and income effects

age effects on consumer demand an additive partially linear regression model an additive partially linear regression model is used to estimate non parametrically the effects of total expenditure and age in the context of engel curves and to investigate the specification and welfare interpretation of the age effects in parametric models of consumer behaviour empirical analysis based on data drawn from the u k family expenditure survey shows that modelling of the effects of age requires a more sophisticated approach than that generally adopted in parametric demand analysis it also shows that failing to adequately capture these effects can have misleading welfare implications jel classification c14 d12 l effet de l ge sur la demande des consommateurs un modele de regression additif partiellement lineaire on utilise un modele de regression additif partiellement lineaire pour faire la calibration non parametrique des effets de la depense totale et de l ge dans le contexte de courbes de engel et pour enqueter sur la specification des effets d ge et leur interpretation en termes de bien etre dans des modeles parametriques de comportements du consommateur l analyse empirique est construite sur des donnees de la u k family expenditures survey et montre que la modelisation des effets de l ge reclame une approche plus sophistiquee que celle qui est generalement utilisee dans l analyse parametrique de la demande on montre aussi que le manque a bien saisir ces effets peut conduire a des conclusions fausses pour ce qui est du niveau de bien etre

comparisons of poverty across periods significance of distributional effects of prices abstract this paper identifies flexible scales from two cross sections of fes data capturing the distributional effects of inflation poverty rates based on the flexible and simple per capita modified oecd deflators reveal different trends in poverty among households and children

on estimating the cost of characteristics indices from consumer demand analysis we examine the information content of relative equivalence scales using a multiperiod framework and argue that in the absence of independence of base ib these scales can be uniquely identified from demand analysis only when the transformations of preferences through time are the same for all household types a property termed as intertemporally invariant base iib utility restrictions imposed by iib on conditional demands are tested empirically and found rejected within the context of a rank 3 demand system applied to individual household data drawn from the u k family expenditure survey 1970 86 welfare implications of false iib assumptions are also empirically investigated jel classification d1 a propos de l estimation du cout des indices caracteristiques a partir de l analyse de la demande des consommateur ce memoire examine le contenu informationnel des echelles d equivalence relative en utilisant un cadre d analyse sur plusieurs periodes et suggere que en l absence d une independance de la base ib ces echelles peuvent etre identifiees d une maniere univoque seulement si les transformations de preferences dans le temps sont les memes pour tous les types de menages on nomme cette propriete utilite de base invariante dans le temps iib les restrictions verifiables imposees par iib sur les demandes conditionnelles sont verifiees empiriquement et sont rejetees dans le contexte d un systeme de demande de rang 3 applique aux donnees des menages individuels dans une etude des depenses des menages de la grande bretagne 1970 86 les implications de faux postulats iib sont analysees empiriquement

financial integration housing and economic volatility abstract the great recession illustrates the sensitivity of the economy to housing this paper shows that financial integration fostered by securitization and nationwide branching amplified the positive effect of housing price shocks on the economy during the 1994 2006 period we exploit variation in credit supply subsidies across local markets from government sponsored enterprises to measure housing price changes unrelated to fundamentals using this instrument we find that house price shocks spur economic growth the effect is larger in localities more financially integrated through both secondary loan market and bank branch networks financial integration thus raised the effect of collateral shocks on local economies increasing economic volatility

household equivalence scales and welfare comparisons abstract the ratio of cost functions of different households facing the same prices and attaining the same utility level is a true cost of demographic characteristics index this index is independent of a base level of income or utility ib if and only if it equals a ratio of household equivalence scales that are themselves ib applied cost index and equivalence scales specifications are usually ib this paper describes the general restrictions on cost functions and social welfare functions required for ib scales and for their use in welfare analysis

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

the consumer price index a research agenda and three proposals this paper argues that dealing with current concerns about the cpi within the framework of economic theory requires developing the theory of the cost of living index under more general assumptions than have thus far been standard it examines three neglected but critical issues that should rank high on the research agenda because of their practical implications for index number construction whose cost of living index why shop and what is a good it concludes by discussing the intersection between the technical problems of constructing the cpi and the political problems of indexing taxes and transfers

the rank and model specification of demand systems an empirical analysis using united states microdata a rank three demand system is estimated with united states consumer expenditure survey microdata a unique price data set is also used which permits the analysis of effects of systematic errors in price variables it is found that errors in price variables bias test results for the rank three hypothesis in particular towards rejection other test results are affected to a lesser extent estimating smaller systems of demand equations even when conditioning on excluded goods yields significantly different results another important conclusion is that model specification is statistically significantly different for households of varying family sizes and housing tenure statuses jel classifications c31 d12 le rang et la specification du modele des systemes de demande une analyse empirique utilisant des microdonnees americaines on calibre un systeme de demande de rang trois a l aide de microdonnees americaines tirees de la united states consumer expenditures survey un ensemble unique de prix est utilise afin de permettre l analyse des effets d erreurs systematiques dans les variables de prix il appert que les erreurs dans les variables de prix distorsionnent les resultats du test de l hypothese de rang trois en faveur d un rejet d autres resultats de tests sont affectes a un moindre degre si l on calibre de plus petits systemes d equations de demande meme en posant des conditions sur des biens exclus des resultats qui different de maniere significative s ensuivent une autre conclusion importante est que la specification du modele est differente de maniere statistiquement significative pour les menages selon la taille de la famille et le statut domiciliaire

farm acreage shocks and crop prices an svar approach to understanding the impacts of biofuels the last 10 years have seen tremendous expansion in biofuels production particularly in corn ethanol in the united states at the same time that commodity prices e g corn have experienced significant spikes while supporters claim that biofuels are renewable and carbon friendly concerns have been raised about their impacts on land use and food prices this paper analyzes how us crop prices have responded to shocks in acreage supply these shocks can be thought of as a shock to the residual supply of corn for food using a structural vector auto regression framework we examine shocks to a crop s own acreage and to total cropland this allows us to estimate the effect of dedicating cropland or non crop farmlands to biofuels feedstock production a negative shock in own acreage leads to an increase in price for soybeans and corn our calculations show that increased corn ethanol production during the boom production year 2006 2007 explains approximately 27 of the experienced corn price rise

getting prices right what should be done much of the profession accepts that the cpi likely overstates the rate of increase of the cost of living it is less clear that there are sound and feasible steps that the bls can adopt to improve matters in the short run there are unresolved conceptual and identification problems in the measurement of quality superlative price indexes are not feasible and feasible approximations are not superlative and may not even be better the need for a single index that aggregates over heterogeneous consumers with different incomes tastes and needs casts serious doubt on the cost of living approach

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

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

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