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

optimism and pessimism a cross country comparison optimism and pessimism influence economic choices if consumers are optimistic they tend to spend a greater proportion of their budget shares on luxuries and a lesser proportion on necessities many models of consumer expenditure do not take into account the influence of optimism and pessimism this paper demonstrates a way to indirectly measure optimism and pessimism by focusing on patterns in engel curve residuals for necessities and luxuries using the revised international comparison program icp 2005 data covering 144 countries this paper presents economy wide optimism and pessimism indicators these indicators provide a useful complement to traditional economic measures of standard of living such as real gross domestic product gdp in purchasing power parity ppp terms these indicators are non economic in traditional terms however since they are constructed as residuals from an economic analysis they could act as a very useful complement to traditional economic indicators and as such may be termed quality of life indicators

customer base analysis partial defection of behaviourally loyal clients in a non contractual fmcg retail setting customer relationship management crm enjoys increasing attention as a countermeasure to switching behaviour of customers because foregone profits of partially defected customers can be significant an increase of the retention rate can be very profitable in this paper we focus on the treatment of a company s most behaviourally loyal customers in a non contractual setting we build a model in order to predict partial defection by behaviourally loyal clients using three classification techniques logistic regression automatic relevance determination ard neural networks and random forests focusing on partial attrition of high frequency shoppers who exhibit a regular visit pattern may overcome the problem of unidentifiability of total defection in non contractual settings classification accuracy pcc and area under the receiver operating characteristic curve auc are used to evaluate classifier performance on a test hold out sample using real life data from an fmcg retailer we show that future partial defection can be successfully predicted i e exceeding the benchmark hurdle of the null model there are no significant differences in terms of performance among alternative classification techniques similar to direct marketing applications we find that past behavioural variables more specifically rfm variables recency frequency and monetary value are the best predictors of partial customer defection this set of variables complements demographic variables confirming findings by other authors about its importance in predicting churn behaviour moreover additional variables listed in decreasing order of importance such as the length of customer relationship mode of payment buying behaviour across categories usage of promotions and brand purchase behaviour are shown to be moderately useful to incorporate in attrition models

indirect addilog translation of indirect utility functions the difficulty of specifying a set of consumer demand equations that can simultaneously display compatibility with rational economic behaviour regularity and have the capacity to represent a comprehensive spectrum of consumer behaviour flexibility is well known a variety of approaches have been investigated in the literature but scope for substantial improvement remains the approach of this paper is to start from indirect utility functions producing globally regular if inflexible systems and to improve flexibility by adding parameters through a device termed indirect addilog translation on connait bien la difficulte de specifier un ensemble d equations de demande du consommateur qui puisse en meme temps etre compatible avec un comportement economique rationnel regularite et avoir la capacite de representer un spectre comprehensif de comportements du consommateur flexibilite la litterature specialisee a propose une variete d approches mais il y a encore place a beaucoup d amelioration l approche suggeree dans ce memoire part des fonctions indirectes d utilite qui produisent des systemes globalement reguliers meme s ils sont inflexibles et en ameliore la flexibilite en ajoutant des parametres via un procede qu on a nomme traduction indirecte addilog

compositional data analysis and zeros in micro data the application of compositional data analysis methods in economics has some attraction the methodology relies upon the use of log ratios in the statistical analysis such an approach is not possible when the data to be analysed include observations where the observed budget share is zero we therefore consider and extend the methods of compositional data analysis in the situation where the data to be analysed include observations where the observed budget share is zero the modified compositional data methods are discussed both in statistical terms and through potential economic interpretations of the method further the modified methodology is applied to the 1988 89 australian household expenditure survey yielding estimates for a system of engel curves

utility functions and global regularity of fractional demand sytems fractional demand systems are utility derived demands having quantities or budget shares proportional to ag bf where g and f are functions of income and a and b vary across goods and are functions of prices many known demand systems that have large regular regions are fractional this paper derives the indirect utility functions that generate all fractional demand systems shows that these systems can all have large regular regions and provides sufficient conditions for their global or nearly global regularity an extension to rank three fractional demands is provided copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

modelling zeroes in microdata although the literature contains a number of suggestions for dealing with problems caused by a preponderance of zero expenditure observations that frequently occur in micro level budget studies in general these suggestions seem to be either empirically intractable or theoretically unappealing in this paper it is argued that a natural theoretical specification can be motivated by duality theory and that the statistical technique of compositional data analysis provides a corresponding complementary stochastic specification the resulting model is a consistent theoretical and stochastic specification for handling the possibility of a zero demand over a range of expenditures and or prices the model is then applied to the 1988 89 australian household expenditure survey

regular effective demand systems reds empirical demand analysis is usually conducted on the basis of either regularity or flexibility this paper takes a middle ground between regularity and flexibility offering a compromise in the form of a new specification termed reds

a system of demand equations satisfying effectively global regularity conditions a parametric specification of an indirect utility function in terms oaf expenditure and two unit cost functions is proposed specification of these unit cost functions in terms of regular functions leads to the notion of an effectively globally regular system of demand equations that is a system of demand equations that is regular over a cone in expenditure price space and for which the regular region includes all points in any given sample and all values of nominal expenditure and prices generating higher values of real expenditure than the sample minimum this general model nests a number of popular demand systems such as the linear expenditure system as special cases an empirical application illustrates some of these ideas copyright 1996 by mit press

a modified implicit directly additive demand system a recently developed demand system nicknamed aidads an implicit directly additive demand system offers an approach to capturing consumer preferences across a wide range of expenditure levels aidads generalizes the les by assuming marginal budget shares vary with utility and hence with expenditure like the les aidads includes subsistence parameters that define minimum consumption levels here we present a modified aidads maidads that replaces the constant subsistence parameters with functions that also vary with utility these transformed subsistence levels are referred to as minimum consumption quantities this model is applied to the 1996 international consumption project data as these data span a wide range of expenditure levels maidads offers a viable alternative for the estimation of a global demand system results suggest minimum consumption quantities for staple grains livestock other food products alcohol and tobacco clothing and footwear and transport and transport services vary

from smith to schumpeter a theory of take off and convergence to sustained growth abstract this paper proposes a theory of the emergence of modern schumpeterian growth that focuses on the within industry forces that regulate the response of firms and entrepreneurs to smithian market expansion and thus identifies an amplification mechanism that the literature has neglected because it solves the model in closed form the paper provides analytical insight on the forces that drive the economy s phase transition and the associated qualitative transformation of industrial activity the resulting s shaped path of gdp per capita replicates the key feature of the data an accelerating phase followed by a deceleration with convergence to a stationary growth rate the model also yields predictions for grand ratios like consumption gdp profits gdp and the distribution of income across factors of production

an implicitly additive demand system the problem of endowing large applied general equilibrium models with numerical values for parameters is formidable for example a complete set of own and cross price elasticities of demands for the monash model of the australianeconomy involves in excess of 50000 items invoking the minimal assumptions that demand is generated by utility maximization reduces the load to about 26000 obviously still a number much too large for unrestrained econometric estimation to obtain demand systems estimates for a dozen or so generic commodities at a top level of aggregation categories like food clothing and footwear etc typically johansen s lead has been followed and directly additive preferences imposed upon the underlying utility function with the move beyond one step linearized solutions of applied general equilibrium models the functional form of the demand system adopted becomes an issue the most celebrated of the additive preference demand systems the linear expenditure system les has one

the return of malthus resource constraints in an era of declining population growth abstract will natural resources comprise an important constraint on economic development in the 21st century we use a macroeconomic model mava to demonstrate the precise nature of this problem first we employ the model to demonstrate that resource constraints do not substantially limit future economic growth under parametric conditions prevailing in the period 1960 2010 second we examine the sorts of changed conditions that are unavoidable in the coming century and demonstrate that declining population growth and the increased dependency rates this implies is likely to result in increasingly important resource constraints ironically it is the decline in population growth rates and not the opposite that may occasion the return of malthusian constraints 1

towards a more general approach to testing the time additivity hypothesis a new procedure is proposed for re examining the assumption of additivity of preferences over time which although untenable is usually maintained in intertemporal analyses of consumption and labour supply the method is an extension of a famous work by browning however it is more general in permitting the estimation of intertemporal demand systems which are explicit in an unobservable variable price of utility but may lack a closed form representation in terms of observable variables such as prices and total outlay it also makes extensive use of duality theory to solve the endogeneity problem encountered in browning s study applying this method with an appropriate estimator to the australian aggregate data it is found that the time additivity hypothesis is decisively rejected which is consistent with browning s conclusion

the dynamics of smithian growth this paper analyzes the evolution of an economy where growth is driven by increased specialization caused by the geographical expansion of markets it proves that such smithian growth exhibits generic threshold behavior below a critical density of transport linkages the economy is split into isolated local markets with limited specialization above the critical density these markets begin to fuse into a large economywide market causing growth to accelerate this allows an explicit test of the consensus among historians of sung dynasty china that the economic revolution during that period was a result of commercialization caused by the creation of a national waterway network

wealth and inequality over eight centuries of british capitalism abstract this paper constructs annual data for the wealth income ratio w y for the uk over the period 1210 2013 it is found that the w y ratio has fluctuated at one two century frequencies about a constant level of approximately 500 over the past eight centuries furthermore a u shaped w y path is identified over the past two centuries and it is argued that the descending part of the u shape is driven by the transition from pre industrial modes of production to industrialization and that the post 1980 upturn in the w y ratio represents the transition from the industrial to the post industrialization era

estimating components of ict expenditure a model based approach with applicability to short time series this article develops a microeconomic model based approach to estimation of national information and communications technology expenditure that is helpful when only very short time series are available the model specification incorporates parameters for network effects and national e readiness finally the model allows for observed nonhomotheticity and noise found in sample data with the latter attributed to country specific influences

world food demand long term projections of global food demand are heavily dependent on which functional form of the food demand equation is used given that real incomes can change substantially over the long term key elements are the dependence of the income elasticity on income which ensures that the food budget share always lies within the 0 1 range and the role of income inequality this article analyzes these issues proposes a new functional form that deals with them and presents estimates of income and price elasticities for food in 138 countries copyright 2012 oxford university press

an empirically oriented demand system with improved regularity properties while the almost ideal demand system has received increasing attention in empirical studies of consumer demand the fact that the underlying piglog cost function is not globally regular has often led to violation of negative semidefiniteness in the estimated slutsky matrix this paper suggests a modification to the piglog class of preferences termed mpiglog which preserves regularity in a wider region of expenditure price space in an empirical section the almost ideal demand system special case of piglog is compared with the analogous special case of mpiglog which the authors term maids the comparison demonstrates the improved regularity features of maids

patents r d subsidies and endogenous market structure in a schumpeterian economy this study explores the different implications of patent breadth and r d subsidies on economic growth and endogenous market structure in a schumpeterian growth model we find that when the number of firms is fixed in the short run patent breadth and r d subsidies serve to increase economic growth as in previous studies however when market structure adjusts endogenously in the long run r d subsidies increase economic growth but decrease the number of firms whereas patent breadth expands the number of firms but reduces economic growth therefore in accordance with empirical evidence r d subsidy is perhaps a more suitable policy instrument than patent breadth for the purpose of stimulating long run economic growth

robust endogenous growth abstract this paper studies a generalization of the schumpeterian models with endogenous market structure that allows the overall production structure to be more than linear in the growth driving factor and yet generates endogenous growth defined as steady state constant exponential growth of income per capita this version of modern growth theory therefore is robust in the sense that its key result obtains for a thick set of parameter values instead of as often claimed for a set of measure zero the paper moreover pays close attention to transitional dynamics showing not only the existence but also the global stability of the endogenous growth steady state

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

new indices of money supply and the flexible laurent demand system the article begins by surveying the existing results on the new divisia monetary aggregates charts display the differences in behavior between the divisia aggregates and the federal reserve s official simple sum monetary aggregates the article then compares system wide fit for the simple sum and divisia monetary aggregates when used as data in the joint estimation of a system of demand equations the demand system is derived from a new laurent expansion approximation to the reciprocal indirect utility function the laurent expansion provides a better behaved remainder term than that of the more commonly used taylor series the results favor the divisia aggregates

economic welfare evaluation in an era of rapid technological change in an era of rapid technological change from the perspective of welfare measurement a case can be made for modifying currently popular consumer demand systems the case is based on the importance of the income effect in particular it is important to avoid a problematic characteristic of some popular demand systems which we term effective homotheticity this characteristic compromises the ability of counterfactual analyses to distinguish different sized welfare effects at different income levels the paper proposes an appropriate modification to two popular demand systems and derives the implied welfare evaluation formula required for counterfactual analysis of non homothetic income effects

the validity of roi as a measure of business performance business performance at the corporate level is widely assessed by the return through changes in the price of the stock and dividends to shareholders however corporate level performance analysis whether for strategic or public policy purposes is inappropriate in many instances because of the heterogeneity of the corporation s operations the strategic business units sbus comprising a corporation are often very diverse profitability analysis grouping these entities together yields few of the insights needed for strategic or public policy decision making because of this heterogeneity profitability analysis is often advocated and undertaken at the sbu level the absence of an equity market at the sbu level means that a measuring instrument other than that based on stock price must be used to assess profitability due to the lack of alternatives the performance of an sbu is almost always based on accounting data in particular the accounting measure return on investment roi is widely regarded as the most useful measure and ultimate bottom line test of business performance james reese and william cool 1978 it is used both as an objective of management and as a dependent criterion variable to evaluate the effect of various factors on performance despite its widespread use roi has been extensively criticized as being a totally inadequate indicator of economic rate of return g c harcourt 1965 ezra solomon 1971 franklin fisher and john mcgowan 1983 roi most typically defined as net income total assets 1 does not properly relate the stream of profits to the investment that produced it the earnings numerator is a consequence of investment decisions made in the past but the assets denominator can be expected to have had influence on not only past and current earnings but also to have influence on future earnings because of this failure to produce an accurate mapping roi has been criticized as being so seriously flawed that it bears little if any resemblance to the crucial concept of internal or economic rate of return the shortcomings of roi are said to be so severe that its cross sectional variations can be completely explained by the inappropriateness of the measure due to a lack of proven validity empirical investigations using roi have been labeled by fisher and mcgowan as totally misleading enterprises and by george benston 1985 as of doubtful value those making use of accounting roi argue that the noise created by the accounting distortions need not be expected to drown out the underlying signal of economic return contained in roi and therefore roi is still appropriate for use in analysis f m scherer 1979 and william long and david ravenscraft 1984 this paper examines the validity of roi as a measure of economic rate of return by ascertaining the existence and extent of the association of corporate level accounting roi with stock return a widely accepted indicator of business performance the null hypothesis for the analysis is that roi has no validity as a measure of business performance and as such will not exhibit an association with stock return while the tests provide direct evidence on the validity of corporate level roi the same underlying theorized inadequacies of accounting roi are also present at the sbu level 1 conclu

a methodology based on profitability criteria for defining the partial defection of customers in non contractual settings abstract the defection or churn of customers represents an important concern for any company and a central matter of interest in customer base analysis an additional complication arises in non contractual settings where the characteristics that should be observed to saying that a customer has totally or partially defected are not clearly defined as a matter of fact different definitions of the churn situation could be used in this context focusing on non contractual settings in this paper we propose a methodology for evaluating the short time economic effects that using a certain definition of churn would have on a company with this aim we have defined two efficiency measures for the economic results of a marketing campaign implemented against churn and these measures have been computed using a set of definitions of partial defection our methodology finds that definition maximizing both efficiency measures and moreover the monetary amount that the company should invest per customer in the campaign for achieving the optimal solution this has been modelled as a multiobjective optimization problem that we solved using compromise programming numerical results using real data from a spanish retailing company are presented and discussed in order to show the performance and validity of our proposal