taxing food and beverages theory evidence and policy we developed a theoretical framework to examine the effect of a change in sales or excise tax on food and beverage demand after considering that consumers may have imperfect tax knowledge are sometimes inattentive to sales tax may not be informed of a sales tax change and pay no sales tax on eligible food or beverages if using food stamps we conducted simulations to assess how much the sales tax elasticity of demand should be adjusted downward from the price elasticity of demand and quantified the advantage of using an excise tax as an anti obesity policy copyright 2013 oxford university press

demand elasticities for food products in brazil a two stage budgeting system the object of this article is to estimate demand elasticities for a basket of staple food important for providing the caloric needs of brazilian households these elasticities are useful in the measurement of the impact of structural reforms on poverty a two stage demand system was constructed based on data from household expenditure surveys pof produced by ibge the brazilian bureau of statistics in 1987 88 and 1995 96 we have used panel data to estimate the model and have calculated income own price and cross price elasticities for eight groups of goods and services and in the second stage for 11 sub groups of staple food products we estimated those elasticities for the whole sample of consumers and for two income groups

semiparametric estimation and consumer demand this paper considers the implementation of semiparametric methods in the empirical analysis of consumer demand the application is to the estimation of the engel curve relationship and uses the british family expenditure survey household composition is modelled using an extended partially linear framework this is shown to provide a useful method for pooling non parametric engel curves across households of different demographic composition c 1998 john wiley sons ltd

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

tricks with hicks the easi demand system we invent implicit marshallian demands which combine desirable features of hicksian and marshallian demands we propose and estimate the exact affine stone index easi implicit marshallian demand system like the almost ideal demand aid system easi budget shares are linear in parameters given real expenditures however unlike the aid easi demands can have any rank and its engel curves can have any shape over real expenditures easi error terms equal random utility parameters to account for unobserved preference heterogeneity easi demand functions can be estimated using gmm or three stage least squares and like aid an approximate easi model can be estimated by linear regression

energy consumption and urban sprawl evidence for the spanish case residential electricity consumption constitutes one of the largest sources of spanish final energy demand to improve electricity savings policies oriented towards efficiency in residential consumption such as replacement of appliances or the construction of nearly zero energy buildings have been suggested and implemented however the potential relevance of urban structural characteristics such as the increase in detached houses in sprawling residential areas has not often been considered the aim of this research is to analyse the relevance of living in a detached house located in a dispersed urban area to household electricity consumption thus an electricity consumption model is estimated by using household socioeconomic variables and including urban characteristics as its determinants such us the level of urban agglomeration or whether families live in detached sprawling homes the model is estimated by using 2014 household budget survey hbs microdata and applying ordinary least squares ols as well as quantile regressions qr as econometric procedures endogeneity problems are corrected by means of instrumental variables the results confirm that living in a detached house significantly increases electricity consumption whereas urban agglomerations have the opposite effect sprawl is occurring rapidly in spanish cities and according to our results it could constitute a relevant source of increase in electricity demand in the following years

some model specification issues in applied demand analysis the availability of large cross sections of household expenditure microdata has given new impetus to applied demand research these data permit modelling detailed household characteristics effects empirical analyses of the conditions under which micro parameters can be recovered using aggregate data estimation of household equivalence scales examination of the importance of labour force variables as conditioning variables in demand models and the generalization of model specifications to rank three systems examples of this research include blundell pashardes and weber 1993 who find that aggregate data alone cannot yield reliable estimates of structural price and income coefficients this is demonstrated with a demographically flexible model using british family expenditure survey fes data they also find however that aggregate data can still provide reasonable forecasts so long as these models contain aggregation factors trend and seasonal components conditions for the identifiability of general household equivalence scales have been explored by lewbel 1989 deaton and muellbauer 1986 and nicol 1994 present theoretical and empirical analyses of equivalence scales and discuss the inherent difficulties in estimating these the availability of microdata has also permitted the use of nonparametric techniques to explore the shape of demand functions these studies have found that functional forms vary from equation to equation in a demand system this provides insights into how improved specifications of parametric models might be formulated as in bierens and pott buter 1990 some other work has shown that conditions for perfect aggregation are not met empirically see browning and meghir 1991 nicol 1993 in particular models which have demographic effects interacting with income are not exactly aggregable models of this type are now quite commonly used in the empirical demand literature

general equilibrium theory with imperfect competition abstract this survey is organized as follows i introduction ii the main issues iii negishi s model iv objective demand in the cournot nash framework v objective demand in the bertrand nash framework vi the assumption of quasi concavity of the profit functions vii compromises between the conjectural and the objective approach viii insights into the notion of perfect competition ix conclusion

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

on the presence and absence of free entry in oligopoly equilibria abstract this note provides sufficient conditions for the presence and absence of free entry at cournot equilibria and some other oligopoly equilibria in a market for a homogeneous commodity

trade liberalization and rising wage inequality in latin america reconciliation with hos theory abstract the paper puts forward the hypothesis that the transitory effects of trade liberalization on wage inequality can differ from the long run outcome in cases where the hos theory predicts a decline in wage inequality in the long run a temporary rise can nevertheless occur due to i the asymmetries in the speed of contraction in the import sector and expansion in other sectors and ii the capital skill complementarity in production the asymmetric contraction and expansion causes a transitory capital accumulation that boosts the relative and the real wage of skilled labor due to capital skill complementarity although the long run hos fundamentals are therefore dominated in the short run by the transient effects arising due to capital skill complementarity the observed rise in wage inequality is nonetheless consistent with the hos theory appropriately extended to a dynamic setting

estimating the value and distributional effects of free state schooling the effects of free of charge state education on income distribution are often studied by allocating government education outlays to households assuming that these outlays equal the benefit which households attach to state schooling this paper proposes a demand analysis approach to estimating the true value of state education as perceived by consumers and uses the results to assess the inefficiency of public provision empirical analysis based on data from cyprus suggests that state schooling costs twice the amount households are willing to pay for the implications of this finding for the equality and anti poverty effects of state education are illustrated

carbon tax simulations using a household demand model abstract the main objective of this paper is to analyse consumer response and welfare effects due to changes in energy or environmental policy to achieve this objective we formulate and estimate an econometric model for non durable consumer demand in sweden that utilises micro and macro data in the simulations we consider two revenue neutral scenarios that both imply a doubling of the co2 tax one that returns the revenues in the form of a lower vat and one that subsidise public transport one conclusion from the simulations is that the co2 tax has regional distribution effects in the sense that household living in sparsely populated areas carry a larger share of the tax burden

aggregation effects on price and expenditure elasticities in a quadratic almost ideal demand system while it is well known that demand elasticities calculated at the macro level will in general differ from those calculated at the micro level because of aggregation effects there remain the questions of how large the effects are and how they vary with the degree of nonuniformity in the income distribution we explore those questions with models based on a quadratic version of the almost ideal demand system we investigate the elasticity differences theoretically and then calibrate the models and generate numerical results using income data for seven countries with widely different distributions the aggregation effects are found generally to be rather small even with highly nonuniform income distributions

cournot equilibrium in large markets under increasing returns abstract we consider cournot partial equilibria in large markets where firms have decreasing average costs it is shown that the outcome of competition is approximatelyefficient if entry is free

a time preference measure of the social discount rate for the uk in this study the social discount rate for the uk is estimated the result compared with the treasury approved rate and the main associated policy implications considered a case is argued for reducing the official discount rate in appraisals involving all long term social projects the estimate of the elasticity of the marginal utility of consumption an important component of the discount rate is supported by plausible and statistically valid regression results the need for further work relating to other major european countries is identified so that discount rate comparisons can be made on a consistent basis

new estimates of the elasticity of marginal utility for the uk this paper provides novel empirical evidence on the value of the elasticity of marginal utility eta for the united kingdom eta is a crucial component of the social discount rate sdr which determines the inter temporal trade offs that are acceptable to society using contemporaneous and historical data new estimates are obtained using four revealed preference techniques the equal sacrifice income tax approach the euler equation approach the frisch additive preferences approach and risk aversion in insurance markets a meta analysis indicates parameter homogeneity across approaches and a central estimate of 1 5 for eta the confidence interval excludes unity the value used in official guidance by the uk government the term structure of the sdr is then estimated the result is a short run sdr of 4 5 declining to 4 2 in the very long run this is higher and flatter than the uk official guidance the difference stems from incorrect calibration of social welfare and estimation of the diffusion of growth other things equal the results suggest that current uk guidance might need to be updated

declining discount rates economic justifications and implications for long run policy should economic policy target immediate problems like malaria and aids or should it target climate change which may have even more dramatic life threatening effects in the very long term we discuss how the pattern of discount rates over the planning horizon bears on this important issue a declining pattern of discount rates is theoretically justified by uncertainty about future economic conditions and its shape and relevance can be estimated from historical data we analyse empirically long term interest rate data from nine countries construct a weighted average representing a possible global discount rate pattern for a very long range of future dates and assess its implications for the valuation of carbon mitigation policies christian gollier phoebe koundouri and theologos pantelidis

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

disaggregated household meat demand with censored data previous research on meat demand has generally used highly aggregated data across time products and consumers however meat products across species are likely stronger substitutes than some products from the same species further demand for specific meat products would be expected to respond differently to market information about food safety or other events this study uses monthly consumer panel data collected between 1992 and 2000 to estimate a disaggregated meat product demand system the use of the expectations maximization algorithm is introduced to estimate a demand system that adjusts for the econometric problem of censored data resulting from purchased shares of some products by individuals often being equal to zero results indicate that certain individual meat products have noticeably different own price elasticities than existing aggregate meat product estimates of their respective species some individual meat products have stronger substitutes across species than within species e g be

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

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

best nonparametric bounds on demand responses this paper uses revealed preference inequalities to provide the tightest possible best nonparametric bounds on predicted consumer responses to price changes using consumer level data over a finite set of relative price changes these responses are allowed to vary nonparametrically across the income distribution this is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths engel curves we label these expansion path based bounds on demand responses as e bounds deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterize taste change and to provide a stochastic environment within which violations of revealed preference inequalities can be assessed

how serious is the aggregation problem an empirical illustration heterogeneity in consumer behaviour may create problems with aggregation across consumers if so we may not be able to make correct inferences about behaviour based on aggregated data however using micro estimates to predict aggregate demand responses to policy changes may also create a bias if not aggregated properly this may sound like a catch 22 situation but it is not as it is possible to calculate both micro and aggregate demand responses based on microdata the size of the aggregation bias is an empirical question in this article we show how to calculate theoretically consistent aggregate demand responses we use both micro and macro data for norwegian household electricity consumption to illustrate the magnitude and direction of different aggregation biases we find considerable aggregation biases in particular when estimating with macro data

estimating a demand system with nonnegativity constraints mexican meat demand a new information based approach for estimating systems of many equations with nonnegativity constraints is presented this approach called generalized maximum entropy gme is more practical and

price and income elasticities of residential and industrial electricity demand in the european union this study examines the short and long run price and income elasticities of residential and industrial electricity demand in the european union between 1996 and 2016 instrumental variable models using the between estimator as well as dynamic panel models are employed to present robust estimates and to assess the impact of different methodologies on the reported elasticities the long run price elasticity of residential electricity consumption is estimated between 0 53 and 0 56 these elasticities are more inelastic than that of industrial electricity use which is reported between 0 75 and 1 01 the choice of different econometric methodologies has only moderate impact on the estimates while long run residential income elasticity estimates are moderately inelastic and estimated around 0 61 industrial electricity use tends to be closely tied to income with elasticities between 0 76 and 1 08 electricity demand in all sectors is highly price and income inelastic in the short run additionally population density temperatures and policy measures also influence sectoral electricity use the above estimates can aid the design of european energy and environmental policy

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

getting help from abroad the macroeconomics of foreign direct investment in infrastructure in low income countries infrastructure financing needs in most low income countries are substantial but funding for such needs is only partly covered by national governments and aid donors this paper introduces foreign direct investment fdi through public private partnerships as a source of infrastructure financing in low income countries a two sector open economy model is developed to assess the macroeconomic performance of fdi in infrastructure with efficient foreign investment an increase in revenue generating infrastructure investment boosts productivity and spurs private investment while stabilizing domestic prices a direct comparison between infrastructure financed by domestic versus foreign investment shows that foreign investment creates higher output growth and welfare gains and is preferable to domestically sourced investment irrespective of the underlying financing instrument the domestic economy is employing fdi in non revenue generating infrastructure is also analyzed and discussed

the impact of tax reforms designed to encourage healthier grain consumption in this paper we simulate the effects of tax reforms aimed at encouraging healthier grain consumption we use a rich data set on household grain consumption in 2003 from the market research institute gfk sweden combined with information on the nutritional content of the consumption we estimate behavioral parameters which are used to simulate the impact on the average household of tax reforms entailing either a subsidy on commodities particularly rich in fiber or a subsidy of the fiber density in grain products our results suggest that to direct the fiber intake towards nutritional recommendations reforms with a substantial impact on consumer prices are required regardless of the type of subsidy implemented the increase in the intake of fiber is accompanied by unwanted increases in nutrients that are often overconsumed fat salt and sugar funding the subsidies by taxing these nutrients or less healthy commodities helps to counteract such developments

welfare losses under cournot competition abstract in a market for a homogeneous good where firms are identical compete in quantities and produce with constant returns the percentage of welfare losses pwl is small with as few as five competitors for a class of demand functions which includes linear and isoelastic cases we study markets with positive fixed costs and asymmetric firms we provide exact formulae of pwl and robust constructions of markets were pwl is close to one in these two cases we show that the market structure that maximizes pwl is either monopoly or dominant firm depending on demand finally we prove that pwl is minimized when all firms are identical a clear indication that the assumption of identical firms biases the estimation of pwl downwards

welfare comparison under exact aggregation new econometric model of aggregate consumer behavior in the united states and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units the model incorporates time series data on quantities consumed prices the level and distribution of income and demographic characteristics of the population it also incorporates cross section data on the allocation of consumer expenditures for households with different demographic characteristics our econometric model is based on the theory of exact aggregation developed by lau 1977a c this theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior one of the most remarkable implications of lau s theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions using the individual demand functions we can analyze the impact of economic policy on consumer welfare

the contributions of angus deaton angus deaton was awarded the 2015 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of consumption poverty and welfare this article reviews his contributions to economics

factor intensities and factor substitution in general equilibrium abstract this article examines how factor intensity rankings between industries and the economy wide asymmetry in the degree of factor substitution combine to influence the manner in which changes in relative commodity prices affect the factoral distribution of income the reciprocal influence of factor endowment changes on the composition of outputs is also discussed the analysis is undertaken in a general three factor two commodity framework the minimal sized model that allows both influences to affect factor prices and admits of the possibility of complementarity between factors factors which are good substitutes find their returns behave somewhat similarly when commodity prices change while factors which are complements experience strongly asymmetrical fortunes a crucial role is played by a comparison of the share of the middle factor in each sector

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

capital markets urban unemployment and land abstract this paper shows that the remarkable result by khan and naqvi that a reduction in the capital rental differential always improves welfare despite the presence of a rigid urban wage can be obtained only for the 2 2 harris todaro model in an extended harris todaro framework incorporating a third specific factor a decrease in a distortion may not necessarily be welfare improving

simple tests of distributional effects on macroeconomic equations the presence of distributional effects in macroeconomic equations is shown to coincide with nonlinearity in micro behavioral relationships parameters estimated with aggregate data as in representative agent models contain distributional biases that are not measurable using aggregate data alone tests for distributional effects and other measures of the extent of aggregation problems are derived using distributional data observed over time significant distributional effects are noted for a model of annual aggregate u s commodity expenditure data a static model that accommodates individual heterogeneity is found to be statistically equivalent to a simply dynamic model that accommodates first order autocorrelation

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

nesting quadratic logarithmic demand systems abstract we propose a new generalised rank 3 demand system which nests all known and new rank 3 and rank 2 demand systems derived from the quadratic logarithmic ql cost function we investigate its statistical adequacy against commonly encountered alternatives using uk household data

a synthesis of the heckscher ohlin and the neoclassical models of international trade a comment abstract batra and casas 1976 have asserted that in the two sector three factor neoclassical model an increase in the supply of one factor at constant commodity prices will increase the output of the commodity using the expanding factor relatively intensively and thereby reduce the output of the other commodity the present note points out that there is a case against their assertion

perfectly competitive markets as the limits of cournot markets a perfectly competitive partial equilibrium market for a single homogeneous good with a bounded continuum of infinitesimal firms is considered cost functions are essentially unrestricted and are allowed to vary smoothly across firms a sequence net of cournot markets each with a finite number of firms which converge smoothly to the perfectly competitive limit in terms of both the inverse demand functions and the distributioon of firm technologies is introduced and it is shown that all markets sufficiently far along the sequence have a cournot equilibrium and all the cournot equilibria converge to the perfectly competitive equilibrium of the limit market

equivalence scales and the costs of disability abstract the impact of disability on household welfare is estimated by equivalence scales using data from the 1986 1987 fes disability survey three methods of identifying scales from cross section data are considered these imply a series of restrictions that are tested on quadratic logarithmic engel curves the results indicate that there are substantial consumption costs associated with physical disability

who benefits from child benefit governments over much of the developed world make significant financial transfers to parents with dependent children for example in the united states the recently introduced child tax credit ctc which goes to almost all children costs almost 1 billion each week or about 0 4 of gnp the united kingdom has even more generous transfers and spends an average of about 30 a week on each of about 8 million children about 1 of gnp the typical rationale given for these transfers is that they are good for our children and here we investigate the effect of such transfers on household spending patterns in the united kingdom such transfers known as child benefit cb have been simple lump sum universal payments for a continuous period of more than 20 years we do indeed find that cb is spent differently from other income paradoxically it appears to be spent disproportionately on adult assignable goods in fact we estimate that as much as half of a marginal dollar of cb is spent on alcohol we resolve this puzzle by showing that the effect is confined to unanticipated variation in cb so we infer that parents are sufficiently altruistic toward their children that they completely insure them against shocks

free trade and income redistribution in a three factor model of the u s economy the move toward free trade promises to alter the distribution of income in the u s labor groups generally do not favor the move toward free trade which can be characterized by the continuing decline in the price of manufactured goods relative to business services the present study predicts that unskilled labor in the u s will lose under a program of free trade using a general equilibrium model of production factor shares industry shares and estimates of substitution for skilled labor unskilled labor and capital are used to examine comparative statics the interplay of factor intensity and factor substitution in the three factor production structure has proven a considerable analytical challenge building on the textbook production model with two factors the third productive factor allows technical complementarity and creates a more complex pattern of factor intensity both factor intensity and factor substitution affect the qualitative nature of the comparative statics little is known about the model s quantitative properties a 3 x 3 model with outputs of the three major sectors agriculture manufacturing services is specified and a 3 x 2 model without agriculture is also examined factor substitution is estimated with production function across states skilled labor separated by various census categories cannot be aggregated with unskilled labor in any sector and constant returns to scale cannot be rejected as a null hypothesis additionally the three inputs capital labor skilled labor are all technical substitutes comparative static results follow a pattern suggested by factor intensity changing prices of goods generally have elastic effects on factor prices stolper samuelson results in other words have a quantitative weight price changes due to a program of free trade will significantly affect income distribution similarly rybczynski type results are quantitatively significant in that factor endowment changes have elastic effects on outputs the implication is that output patterns will differ significantly across freely trading partners elasticities of factor prices with respect to endowment changes on the other hand are very inelastic this inelasticity suggests that there would only be small long run effects of international migration capital flows or endowment differences on the international pattern of factor income this inelasticity is called near factor price equalization nfpe under nfpe freely trading countries will experience a vector of factor prices nearly equal to each other nfpe suggests that the qualitative effects of changing or different factor endowments

supermarket choice and supermarket competition in market equilibrium multi store firms are common in the retailing industry theory suggests that cross elasticities between stores of the same firm enhance market power to evaluate the importance of this effect in the u k supermarket industry we estimate a model of consumer choice and expenditure using three data sources profit margins for each chain a survey of consumer choices and a data set of store characteristics to permit plausible substitution patterns the utility model interacts consumer and store characteristics we measure market power by calculating the effect of merger and demerger on nash equilibrium prices demerger reduces the prices of the largest firms by between 2 and 3 8 depending on local concentration mergers between the largest firms lead to price increases up to 7 4

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

flexible and semiflexible consumer demands with quadratic engel curves in this paper we introduce three flexible consumer demand systems in which expenditures on goods are quadratic functions of income we view these alternatives as to the demand systems used heretofore in the empirical modeling of rank three demands namely those in which expenditure shares are quadratic functions of the logarithm of income curvature conditions required by theory can be imposed locally during the estimation for each and a semiflexible version can be estimated for illustrative purposes we estimate various forms of two of the systems using canadian data on seven categories of goods for the period 1947 to 1995

food scares in an uncertain world we develop a model that explains the stylized facts of food scares an immediate and sharp decline in consumption of the product followed by a slow and frequently partial recovery of demand after the scare passes the model is used in conjunction with the natural experiment afforded by the mad cow crisis to elicit empirical information on decision makers perception of uncertainty our theoretical and quantitative results suggest that observed behavior is consistent with sharp changes in beliefs and the presence of knightian uncertainty as measured by the degree of imprecision in our model

on the rate of convergence of oligopoly equilibria in large markets an example abstract in this note we explore the rate of convergence of cournot nash equilibria with free entry and those with an entry deterring monopolist in a replicated market where the market demand functions is linear and firms face linear cost curves

international factor movements and the ramaswami argument in a succinct but classic article appearing in economica in 1968 ramaswami put forth an argument supporting the superiority of a policy that attracts foreign factors over a policy that allows a relatively abundant factor to emigrate in each case the active home country is assumed to levy taxes on factor flows so as to capture for itself the discrepancy in return to the same factor at home and abroad the asymmetry reflected by this policy ranking rests on a basic propeity of production functions the convexity of technology plus the ability of the active home country to hire or rent out factors at wages or rentals prevailing in the foreign country briefly put the ramaswami argument proceeds as follows suppose the active home country is capital abundant and has levied on optimal tax on earnings of its own capital operating abroad now consider repatriating this capital and allowing for the first time some inflow of foreign labour in particular suppose the home country allows a level of immigration identical to the labour force previously employed with the home capital that is being repatriated such a transfer of home capital and foreign labour out of the foreign country leaves factor proportions abroad undisturbed and thus does not alter the wage that must be paid to attract the requisite bundle of foreign workers although the home country thus avoids any increase in factor costs in foreign markets it can increase output since the capital labour ratiooriginally employed at home at high home wage rates is greater than the ratio in the freshly acquired bundle from abroad by adopting a uniform capital labour ratio over all factors now employed at home output and thus real income rises there may be even further gains to be had by allowing yet a different optimal level of immigration in the home country which has now banned capital exports 2 essential to the ramaswami argument is the ability of the home country to extract a bundle of factors previously employed abroad without disturbing factor prices in that country indeed jones coelho and easton 1983 have suggested that in the context of the ramaswami discussion the original argument could be pursued to suggest that the home country gains not only from repatriating its own capital but from actually encouraging foreign capital to be employed at home such a capital flow is admittedly uphill the home country would have to pay out more in rentals than such capital can earn at home despite this fact such an import of capital and labour in the same proportions found abroad does not alter foreign factor prices but does via the same ramaswami type argument on the convexity of the technology result in gains at home although ramaswami s own discussion starts with a repatriation of home capital previously invested abroad his argument can be applied directly to the foreign autarky factor endowment bundle if technology exhibits constant returns to scale and if all both factors are indeed internationally

a theorem on income distribution in a small open economy abstract if the number of productive factors exceeds the number of commodities produced changes in factor endowments and or any commodity price will alter factor prices in a way that depends both upon factor intensities and the degree of factor substitutability however bilateral factor intensity rankings for constant price industries by themselves restrict possible factor price changes if factors are ranked from most to least intensive in any such pair of industries all the gainers cannot be located at one end of the ranking

meat meets meta a quantitative review of the price elasticity of meat the price elasticity of meat has been estimated in numerous studies that utilize a variety of disparate modeling procedures in light of differences in the literature a meta analysis is performed to assess the sensitivity of the meat price elasticity to a number of characteristics including the type of meat specification of demand nature of data estimation method characteristics of the publication outlet and location of demand the results from estimating linear and box cox meta regressions coupled with different panel data treatments reveal that these characteristics have differing influence on the reported price elasticity

sensitivity of price elasticity of demand to aggregation unobserved heterogeneity price trends and price endogeneity evidence from u s data abstract price elasticity estimates of residential electricity demand vary widely across the energy economics and policy literature in this paper we seek to explain these findings using three nationwide datasets from the u s the american housing survey forms eia 861 and the residential energy consumption survey we examine the role of the sample period level of aggregation use of panel data use of instrumental variables and inclusion of housing characteristics and capital stock our findings suggest that price elasticities have remained relatively constant over time upon splitting our panel datasets into annual cross sections we do observe a negative relationship between price elasticities and the average price whether prices are rising or falling appears to have little effect on our estimates we also find that aggregating our data can result in both higher and lower price elasticity estimates depending on the dataset used and that controlling for unit level fixed effects with panel data generally results in more inelastic demand functions addressing the endogeneity of price and or measurement error in price with instrumental variables has a small but noticeable effect on the price elasticities finally controlling for housing characteristics and capital stock produces a lower price elasticity

a rational rank four demand system past parametric tests of demand system rank employed polynomial engel curve systems however by gorman s 1981 theorem the maximum possible rank of a utility derived polynomial demand system is three the present paper proposes a class of demand systems that are utility derived are close to polynomial and have rank four these systems nest rational polynomial demands and so can be used to test ranks up to four these systems are suitable for applications where high rank is likely such as demand systems involving a large number of goods a test of rank using this new class of systems is applied to uk consumer demand data

estimating food demand in paraguay from household survey data we estimate a food demand system in paraguay based on the 1997 national household survey considering 12 food categories to obtain demand elasticity estimates from household survey data accounting for quality effects measurement errors and censored observations price indexes are obtained from ordinary least squares predictions of changes in unitary values caused by spatial and temporal variations and the two step estimation procedure shonkwiler and yen 1999 is applied our approach yields reasonable estimates of combined quantity and quality responses with respect to price results suggest distinct consumption behavior in urban and rural areas particularly for chicken eggs dairy and fats and oils which are likely because of differences in the food distribution system and availability of nonmarket food sources

the microeconometric approach to modelling energy demand some results for uk households the paper is concerned with the empirical modeling of domestic demand for energy at the level of the individual household a model of household energy expenditures and energy using durable ownership is described estimation takes place using a pooled sample of households drawn from the repeated cross sections of the annual family expenditure survey fes price and income elasticities are found to be highly dependent on individual household characteristics type of house tenure energy using durable ownership and outside temperature finally the results are placed in a policy relevant context copyright 1991 by oxford university press

free trade and factor price polarization abstract factor price equalization between trading partners is perhaps the best known implication of the heckscher ohlin samuelson model of production and trade it has long been known that with more primary factors than goods this result is not necessary recent studies have investigated effects of changing prices on factor payments in the three factor two good trade model this short note emphasizes that when such an economy moves from autarky to free trade payment to a relatively cheap factor may fall polarizing factor prices conditions favoring this outcome are examined

the matrix approach to evaluating demand equations as there is a plethora of demand models which one should be used to estimate income and price elasticities the paper sheds light on this important practical problem by developing a matrix approach to simulating mas demand equations to analyse their performance under idealized circumstances artificial data on the dependent variable are generated by one model and these are then used for the estimation of another model as an illustrative application using four popular models a 4 4 matrix is generated which gives all pair wise comparisons the performance of the models is then evaluated on the basis of the quality of the income and own price elasticity estimates

cournot equilibrium with free entry the case of decreasing average cost functions this paper investigates in the context of a market for a homogeneous commodity the asymptotic properties of cournot equilibria with free entry when the size of the market increases indefinitely the analysis focuses on the case where the average cost function is always decreasing and the marginal cost function is non decreasing for all sufficiently large outputs

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

the welfare effects and the distributive impact of carbon taxation on italian households in this work the welfare effects and the distributive impact on italian households of the italian carbon tax are calculated the carbon tax has been introduced in italy at the beginning of 1999 asking for smooth increases over a number of years in the prices of most fossil fuels its welfare effects have been calculated using true cost of living index numbers and the compensating variation the parameters have been obtained through estimation of a complete almost ideal demand system using households data from 1985 to 1996 the welfare loss turns out to be quite substantial and affects italian households in a non negligible way but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of carbon taxation as the effect becomes bigger as we move up the income distribution this evidence might encourage the use of carbon taxes at least in the transport sector as cost effective instruments of environmental policy especially after the ratification of the kyoto protocol on climate change

regional welfare weights for the uk england scotland wales and northern ireland evans d kula e and sezer h 2005 regional welfare weights for the uk england scotland wales and northern ireland regional studies 39 923 937 in relation to public spending and regional policy the importance of distributional issues is stressed and regional welfare weights are derived from an appropriate underlying social welfare function estimates of these weights are then provided for the four countries comprising the uk welfare weights now have a very high policy profile following the special emphasis placed by the uk treasury in its recently revised guidance on appraisal and evaluation in government on the assessment of the distributional impacts of social projects and policies from an empirical perspective the critical component of each welfare weight measure is the elasticity of marginal utility of income e alternative estimation approaches based on demand analysis and income tax data are used to determine e and a preferred measure of 1 60 emerges the resulting regional we

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

can targeted food taxes and subsidies improve the diet distributional effects among income groups this paper analyses distributional effects of revenue neutral tax reforms aimed at improving dietary quality and encouraging healthier grain consumption using data on household grain purchases we analyse both the impact on dietary quality and the tax incidence among income groups of vat reforms and excise duty reforms the vat reforms include subsidies of healthy products products labelled with the swedish national food administration s healthy symbol funded by increased vat on less healthy products the excise duty reforms contain a subsidy of fibre content funded by excise duties on either added sugar or saturated fat our results suggest that the vat reforms have a similar impact on dietary quality across all income groups with increases in fibre intake but also unwanted increases in the intake of nutrients frequently overconsumed fat salt and sugar the impact on dietary quality of the vat reforms is therefore difficult to evaluate with the exception of the lowest income group the excise duty reforms seem to have a positive health effect across all other income groups with increases in the intake of fibre and reductions in the intake of saturated fat sugar and added sugar for the lowest income group we find the highest increase in the intake of fibre but generally an increase in the intake of the other nutrients too the excise duty reforms also result in a more energy dense grain diet with increases in the intake of calories for all income groups both the vat reforms and the excise duty reforms appear to be progressive the lowest income group pays less food taxes and generally faces a lower overall post reform price level the income group that increases its tax payments most is the one with the highest income this is also the income group that faces the largest increase in the overall post reform price level

consumer demand and the role of labour supply and durables in this article i test empirically whether intratemporal preferences between 1 nondurables and labour supply and 2 nondurables and housing are separable in doing so careful attention is paid to the potential endogeneity of the total budget labour supply and housing for housing i offer two separate solutions to the problem of correlation between house size proxied by number of rooms and unobserved heterogeneity first instrument with a children s sex composition dummy and second select on households residing in public housing the results strongly reject separability between nondurables and labour supply for nondurables and housing the results are more mixed

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

complementarity in a simple general equilibrium production model a simple three factor two good general equilibrium model allowing complementarity in production is examined conclusions of general equilibrium economics with two factors must be reinterpreted and qualified when complementarity is possible sign patterns of how changing factor endowments affect outputs and how changing prices affect factor payments are uncovered for a small open economy results should prove valuable to a wide range of economists interested in extending general equilibrium analysis to include complementary factors of production

exchange rate based stabilisation durables consumption and the stylised facts in this article we show that a model featuring durable consumer goods imperfect substitution between domestic and foreign assets and weak credibility can explain the qualitative and quantitative aspects of the stylised facts associated with exchange rate based stabilisation including the tremendous increase in real interest rates following a temporary reduction in the crawl total consumption spending rises 14 26 the real exchange rate appreciates 20 37 and the current account deficit swells to 10 15 of gross domestic product despite large capital inflows the real interest rate increases from 10 to 20 100