Calibration of incomplete demand systems in quantitative analysis |
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| Authors: | John C Beghin Jean-Christophe Bureau Sophie Drogué |
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| Institution: | 1. 260 Heady Hall , Economics, Iowa State University , Ames, IA 50011-1070, USA;2. Institut National de Recherche Agronomique (INRA) , Ames, IA 50011-1070, USA;3. Institut National Agronomique Paris Grignon and INRA , Ames, IA 50011-1070, USA;4. INRA , Ames, IA 50011-1070, USA |
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| Abstract: | An easily implemented and flexible calibration technique for partial demand systems is introduced, combining recent developments in incomplete demand systems and a set of restrictions conditioned on the available elasticity estimates. The technique accommodates various degrees of knowledge on cross-price elasticities, satisfies curvature restrictions, and allows the recovery of an exact welfare measure for policy analysis. The technique is illustrated with a partial demand system for food consumption in Korea for different states of knowledge on cross-price effects. The consumer welfare impact of food and agricultural trade liberalization is measured. |
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