No. 39 - Estimation of complete demand systems: the trinomial expenditure system in comparison with alternative demand systems

by Carlo Andrea Bollino
Vai alla versione italiana Site Search

In this paper, I consider the issue of how total expenditure enters in the consumer demand equations and the impact of demographic characteristics. I introduce a new class of demand systems (labeled "trinomial expenditure system", TES) which nests, among others, the linear expenditure system, the quadratic expenditure system and the PIGL system. Empirical results are based on Italian household budget data (1973-78). While previous studies in Italy have focused upon time series data, this is the first attempt to view the Italian household behavior from a different perspective. On the basis of the estimates I first confirm the validity of the TES with respect to alternative forms and I next consider the effect of family size on income and price elasticities. The comparison is carried on in terms of likelihood values, regularity conditions and accuracy of estimates both inside and outside the sample.

Full text

  1. 31 October 1984
    No. 39 - Estimation of complete demand systems: the trinomial expenditure system in comparison with alternative demand systems
    PDF 2 MB