The Information Approach to Demand Analysis

Theil, Henri

doi:10.1007/978-94-011-2408-9_3

Cited by 245 publications

(139 citation statements)

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“…(4) More than 90% of observations lie above the 45°line 7 For related approximation results, see Kloek (1967), Theil (1967) and Theil (1975/76). Diewert tends to refer to DP and DQ as T€ ornqvist-Theil indexes, after T€ ornqvist (1936), Theil (1965) and Theil (1967). For more on Divisia indexes, see Balk (2005) and Hulten (1973).…”

Section: (Iv) Cross-country Evidencementioning

confidence: 99%

“…14 A partial listing of the major studies on the income and price sensitivity of demand, each dealing with a large number of countries, includes Chen (1999), Gao (2012), Goldberger and Gamaletsos (1970), Houthakker (1957), Liu (2018), Lluch and Powell (1975), Lluch et al (1977), Muhammad et al (2013), Regmi and Seale (2010), Rimmer and Powell (1992), Seale and Regmi (2006), Seale et al (2003), Selvanathan (1993), Selvanathan and Selvanathan (2003), Theil and Clements (1987) and Theil et al (1981Theil et al ( , 1989. 15 Popular demand models are the linear expenditure system (Stone, 1954), the Rotterdam model (Barten, 1964;Theil, 1965), the almost ideal model and its quadratic extension (Deaton & Muellbauer, 1980a;Banks et al, 1997) and the translog model (Christensen et al, 1975). For major reviews, see Bewley (1986), Deaton (1986), Deaton and Muellbauer (1980b), Goldberger (1987), Pollak and Wales (1992), Powell (1974), Theil (1975/76) andTheil (1980).…”

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confidence: 99%

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Four Laws of Consumption

Clements

2019

Economic Record

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Scientific knowledge can be distilled into a set of laws that are sufficiently general and robust to be useful in describing and predicting behaviour – the behaviour of physical objects (the orbits of the planets, for example), invisible forces (electricity), economies (why some prosper and others languish) and people (education as deliberate investment in human capital). This paper identifies four empirical regularities in consumption behaviour that are sufficiently general and pervasive to qualify as ‘laws’: Engel’s law; the law of demand (the downward‐sloping demand curve); quantities more dispersed than prices; and the ‘law’ of -12 for price elasticities. In each case, I survey previous research, use international evidence to illustrate the workings of the laws and demonstrate their practical use.

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Section: (Iv) Cross-country Evidencementioning

confidence: 99%

mentioning

confidence: 99%

Four Laws of Consumption

Clements

2019

Economic Record

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“…We use the popular Rotterdam demand system (Barten, 1964;Theil, 1965), which is used in many applied demand studies. The theoretical properties of the Rotterdam demand system were recently considered by a number of researchers (Barnett, 1979;Mountain, 1988;Selvanathan, 1991).…”

Section: Introductionmentioning

confidence: 99%

Similarities in the Consumption Patterns of the Five Asian Tigers

Selvanathan

2003

Asian Economic Journal

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The five countries of Hong Kong, Japan, Korea, Singapore and Taiwan are considered to be the major Asian economic ‘Tigers’ behind Asia's growth in the late 1900s. In this paper, we analyze the consumption patterns of these five countries, using the most recent consumption data and employing the system‐wide approach. We find that the consumption data from these five countries support a number of empirical regularities, including the ‘law of demand’ and ‘Engel's law’. Based on the estimation results, we find that in all five countries, food, housing and medical care (except in Taiwan) are necessities, while clothing, durables (except in Singapore) and transport are luxuries. Demand for all the commodities is price inelastic. Furthermore, we find that the demand hypothesis, homogeneity, is acceptable for all five countries while Slutsky symmetry is acceptable only for Hong Kong, Singapore and Taiwan. We also find that the preference‐independence hypothesis is acceptable for all countries except Japan. Overall, consumption patterns of consumers appear to be similar across the five countries, while some differences exist between Japan and the other four countries.

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“…The logarithmic forms of a log-change price index and quantity index are de®ned by Óù i log ( p 1i a p 0i ) and Óù i log (q 1i aq 0i ) 2) where p ti and q ti , respectively, are the price and the quantity of the i-th item of commodities at time t, and ù i is the weight for that item. There are two well-known log-change indexes: one is the To Èrnqvist Index (To Èrnqvist, 1936;Theil, 1965), and the other is the Walsh Index (Walsh, 1901). These indexes have the following weights T ornqvist's weight: ù T i (W 1i W 0i )a2 (1) and Walsh's weight: ù W i ( E ti p ti q ti the expenditure, and Y t ÓE ti the total expenditure.…”

Section: Introductionmentioning

confidence: 99%

“…3) The Vartia Indexes have very useful properties: see Vartia (1976), Sato (1976) and Diewert (1978). Over the past few decades, the To Èrnqvist Index has become popular in theoretical attractiveness; see Theil (1965), Diewert (1976Diewert ( , 1978Diewert ( , 1981, and Caves et al (1982a, b). Nevertheless, we have only limited information on the links between the Vartia Indexes and other log-change indexes.…”

Section: Introductionmentioning

confidence: 99%

A Family of Almost Ideal Log-change Index Numbers

Tsuchida

1997

Japanese Econ Rev

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This paper describes a family of log-change indexes that nearly or exactly satisfy the strong factor-reversal test and that can also converge to the Vartia Indexes. Our family of log-change indexes includes the To Èrnqvist Index and the Walsh Index. Over the past few decades, the Vartia Indexes and the To Èrnqvist Index have become popular in theory and practice. Nevertheless, we have only limited information on the links between the Vartia Indexes and other log-change indexes. Our family of log-change indexes explains these links. JEL Classi®cation Numbers: C43, Index Numbers and Aggregation. Ã I would like to thank an anonymous referee for his valuable comments, which helped improve the quality and exposition of this paper. Any remaining errors are, of course, my own. Samuelson and Swamy (1974), the price index and the quantity index satisfy the weak factor-reversal test if the product of these indexes equals the total expenditure ratio for the two periods. 1) FollowingIf, in addition, they have the same functional forms, then they satisfy the strong factor-reversal test. In this paper, we shall discuss only the log-change price index and quantity index with the same weights.2) We use only the natural logarithms.± 324 ±

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The Information Approach to Demand Analysis

Cited by 245 publications

References 8 publications

Four Laws of Consumption

Four Laws of Consumption

Similarities in the Consumption Patterns of the Five Asian Tigers

A Family of Almost Ideal Log-change Index Numbers

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