Engel curves and systems of demand functions

Aasness, Jørgen; Rødseth, Asbjørn

doi:10.1016/0014-2921(83)90059-4

Cited by 20 publications

(12 citation statements)

References 13 publications

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“…1 Beneito's contribution demonstrates an improvement over previous research of Aasness and Rodseth (1983) on the similar content, but it did not capture the features of Haque (1984Haque ( , 1988 on the characteristics of variable expenditure elasticities and household size elasticities of expenditure.…”

Section: Introductionmentioning

confidence: 84%

“…has improved only slightly. Some of the more prominent works on the specification and estimation of Engel curves are Engel (1857), Working (1943), Nicholson (1949), Prais and Houthakker (1955), Leser (1963), Kakwani (1978), Bewley (1986), Giles and Hampton (1985), Aasness and Rodseth (1983), Haque (1984Haque ( , 1988, Banks et al (1997) and Beneito (2003).…”

Section: Introductionmentioning

confidence: 99%

“…Three separate studies, Aasness and Rodseth (1983), Haque (1984Haque ( , 1988 and Beneito (2003) have adopted the Box-Cox transformation technique in the specification and estimation of Engel curves. Aasness and Rodseth (1983) preferred a complete system of equations.…”

Section: Introductionmentioning

confidence: 99%

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Estimation of a complete system of nonlinear Engel curves: further evidence from Box–Cox Engel curves for Sri Lanka

Rajapakse

2011

Applied Economics

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The specification and estimation of Engle curves has drawn much attention over many years since the earliest attempt of Working (1943). Among the many approaches, a complete system of Engel curves stood out as more appealing as it explicitly imposes the important budget constraint in the allocation of family budgets. Further, extended researches were undertaken on nonlinear specifications as they are likely to produce results that are closer to the reality than the linear systems. Beneito (2003) attempted Box-Cox form of nonlinear specification but ended up estimating a set of linear equations using seemingly unrelated regression equations method. The present research extends the previous work on Engle curves in two ways; first by incorporating key demographic characteristics into the determination of expenditures in the specification of the Box-Cox form of nonlinear system, and second by using primary micro data from large household surveys to estimate the system by nonlinear estimation methods. Our estimations have produced robust results; the expenditure patterns are significantly nonlinear and the expenditure patterns are significantly different for different demographic groups.

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Section: Introductionmentioning

confidence: 84%

Section: Introductionmentioning

confidence: 99%

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Estimation of a complete system of nonlinear Engel curves: further evidence from Box–Cox Engel curves for Sri Lanka

Rajapakse

2011

Applied Economics

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“…We consider the within-group variance in total expenditure to be small enough such that this aggregation is unproblematic. Moreover, the assumption of normally distributed error terms is more likely to hold with grouped data (Aasness & Rødseth, 1983).…”

Section: Estimation Of Demand Systemmentioning

confidence: 99%

Rags and Riches: Relative Prices, Non-Homothetic Preferences, and Inequality in India

Almås

Kjelsrud

2017

World Development

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It is well known that consumption patterns change with income. Relative price changes would therefore affect rich and poor consumers differently. Yet, the standard price indices are not income-specific, and hence, they cannot account for such differences. In this paper, we study consumption inequality in India, while fully allowing for non-homotheticity. We show that the relative price changes during most of the period from 1993 to 2012 were pro-poor, in the sense that they favored the poor relative to the rich. As a result, we also find that conventional measures significantly overstate the rise in real consumption inequality during this period.The main lesson from our study is the importance of accounting for non-homotheticity when measuring inequality. The price index literature has, as of yet, paid relatively little attention to this. In our application, however, it turns out that the allowance for non-homotheticity is quantitatively much more important than much discussed adjustments, such as those for substitution in consumption.

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“…We consider that the within group variance in total expenditure is small enough such that this aggregation is unproblematic. Moreover, the assumption of normally distributed error terms is more likely to hold with grouped data (Aasness and Rødseth, 1983).…”

Section: Estimation Of Demand Systemmentioning

confidence: 99%

Pro-Poor Price Trends and Inequality -- The Case of India

Almås

Kjelsrud

2016

SSRN Journal

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It is well known that people's consumption patterns change with income. Relative price changes therefore affect rich and poor consumers differently. Yet, the standard price indices are not income-specific and hence, the use of these mask these differences in cost-of-living. In this paper, we study consumption inequality in India, while fully allowing for non-homotheticity.Our analysis shows that the changes in relative prices in a large part of the period from 1993 to 2012 were pro-poor, in the sense that they favored the poor relative to the rich. As a result, we also find that the standard measures significantly overestimate the rise in real inequality.Moreover, we show that the allowance for non-homotheticity is quantitatively much more important in our application than the adjustment for substitution in consumption, despite the larger attention paid to the latter in the literature. We also illustrate how conventional measures exaggerate inter-temporal changes in inequality when there is segregation in consumption/production, by which we mean that people's consumption patterns are skewed towards goods intensively produced by people of their own group. * Acknowledgements: We are grateful to Erik Sørensen for sharing some of his Python scripts with us.

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Engel curves and systems of demand functions

Cited by 20 publications

References 13 publications

Estimation of a complete system of nonlinear Engel curves: further evidence from Box–Cox Engel curves for Sri Lanka

Estimation of a complete system of nonlinear Engel curves: further evidence from Box–Cox Engel curves for Sri Lanka

Rags and Riches: Relative Prices, Non-Homothetic Preferences, and Inequality in India

Pro-Poor Price Trends and Inequality -- The Case of India

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