Estimating and testing the compensated double-log demand model

In spite of the proliferation of flexible functional forms for consumer demand systems, the double-log demand model continues to be popular, especially in applied work calling for single-equation models. It is usually estimated in uncompensated form. It can also be estimated in compensated form, by deflating the income variable alone using Stone's price index. The compensated form has the same right-hand side as a single-equation version of the popular linear approximation to the Almost Ideal demand model, facilitating the construction of a test for choosing between the two alternatives. This paper demonstrates these results, develops the specification test, and illustrates its application using US meat consumption data. Simulations suggest that the test is well-behaved with good power in typical applications.     

Consumer allocation models: Choice of functional form

The functional form of consumer allocation models should be able to satisfy theoretical properties derived from the theory of consumer demand. The paper sketches four approaches that meet this condition. Of course, also empirical performance matters. Next to naive goodness-of-fit comparison, non-nested hypothesis testing can be employed. The latter technique is applied to a comparison of four versions of differential demand systems: the Rotterdam system, a version of the Almost Ideal Demand (AID) system, the CBS system and the NBR system. These systems are artificially nested in a more general model using scalar weights in contrast to Barten and McAleer (1991) who use matrix weights for this purpose. Annual data over the period 1921–1981 for The Netherlands for four major groups of consumer expenditure have been used for the empirical application. The CBS system dominates the others.     

Decomposing household,professional and market forecasts on inflation: a dynamic factor model analysis

A dynamic factor model with stochastic volatility is used to investigate the relationships between three alternative measures of inflation expectations. The results show evidence of both a common time-varying trend and a common transitory component between inflation and short-term inflation expectations from households, professionals and markets. While the common time-varying trend has declined in both level and volatility since the early 1980s, it was found that consumer expectations are disproportionately influenced by the visibility of prices of select few goods. Roughly speaking, a 1% point increase in food and energy prices leads to about 1/3% point increase in consumer forecasts of inflation. In terms of policymaking, this finding suggests that stability in highly visible prices can moderate inflation in a meaningful way.     

Revealed Preference Analysis of Characteristics Models

Characteristics models have been found to be useful in many areas of economics. However, their empirical implementation tends to rely heavily on functional form assumptions. In this paper we develop a revealed preference approach to characteristics models. We derive the necessary and sufficient empirical conditions under which data on the market behaviour of heterogeneous, price-taking consumers are non-parametrically consistent with the consumer characteristics model. Where these conditions hold, we show how information may be recovered on individual consumers' marginal valuations of product attributes. In some cases, marginal valuations are point identified, and in other cases, we can only recover bounds. Where the conditions fail, we highlight the role which the introduction of unobserved product attributes can play in rationalizing the data. We implement these ideas using consumer panel data on the Danish milk market.     

A BOX–COX CONSUMER DEMAND SYSTEM NESTING THE ALMOST IDEAL MODEL*

This article proposes a consumer demand system that has a generalized functional form characterized by the Box–Cox transformation. The new model offers a wider range of responses to both price and expenditure changes than the existing price independent generalized linear models, including the almost ideal demand system. Even with these features, its functional form is relatively simple and easy to interpret and implement. An empirical illustration is given for Japanese demand for nondurable goods and services. The results show that the new model is preferable to the nested models in terms of relative explanatory power and producing reasonable elasticities.     

我国股票市场财富效应测度的实证研究

利用我国1991～2008年股票市场与居民消费的年度数据,建立股票市场财富效应模型,采用处理非平稳时间序列回归的协整理论,对股票市场对我国城镇居民消费性支出的影响作实证分析,并用误差修正模型得到因变量的短期调整。研究结果表明：随着我国经济增长和居民收入的增加,股票财富对居民消费的影响不断增强。无论从长期还是短期分析,我国股票市场的变动都会给居民消费带来财富效应。     

Advertising in consumer allocation models: choice of functional form

This study investigates the empirical performance of four different functional forms for advertising-augmented consumer allocation models. The investigation is carried out within the context of the UK alcoholic drinks markets. The aims of the study are twofold: (i) to assess which of the four functional forms provides the best explanation of the data and may serve, therefore, as the most suitable framework for investigating advertising effects in these markets; and (ii) to consider whether the findings with regard to advertising effects are robust and consistent across model specifications. Advertising is found to have had no significant effect upon the ‘product composition’ or ‘level’ of total alcoholic drink consumption in the UK over the period from 1964 to 1996, and this result is robust with respect to variations in the specification of functional form. The consumption of alcoholic drink is affected by relative prices, total consumer budgeted expenditures and, to some extent, by autonomous shifts in tastes. The balance of the evidence from tests for functional form appeared to favour the Almost Ideal Demand system as a framework for investigating the influence of advertising and other factors on drink consumption.     

The econometric modelling of aggregate consumer behaviour

This paper examines several problems involved in modelling the structure of consumer behaviour. A new model of consumer demand is presented which encompasses the indirect translog, the CES and the LES as special cases, enabling nested comparisons to be made. Within this framework we show that acceptance of zero-degree homogeneity and/or symmetry of the Slutsky matrix is heavily dependent upon the structure within which inferential tests are carried out, and that great care must be utilised in formulating nested hypotheses and drawing inferences on the basis of χ² and F-statistics. We then show that conventional econometric work implies that consumer preferences must be homothetic if symmetry of the Slutsky matrix is imposed. An alternative procedure is suggested and utilised. Finally, we suggest that low Durbin–Watson statistics may arise from misspecification of functional form and may not be due solely to omitted dynamics, as many conjecture.     

Is product boycott a good idea for controlling child labor? A theoretical investigation

A popular form of action to curb child labor and uphold international labor standards in general is a ‘product boycott’ by consumers. There are labeling agencies that inform us if, for instance, a carpet or a hand-stitched soccer ball is free of child labor. The presence of a consumer boycott will typically mean that products tainted by child labor will command a lower price on the market than ones certified to be untainted. It is popularly presumed that such consumer activism is desirable. The paper formally investigates this presumption and shows that consumer product boycotts can, in a wide class of situations, have an adverse reaction that causes child labor to rise rather than fall. This happens under weak and plausible assumptions. Hence, there has to be much greater caution in the use of consumer activism, and one has to have much more detailed information about the context where child labor occurs, before using a boycott.     

Specification and testing of count data recreation demand functions

This article examines the effects of alternative formulations of count data recreation demand models on parameter estimates, model selection, and consumer surplus. The results indicate that large parameter and consumer surplus differences exists across the various count model formulations. More importantly, the results show that distributional assumptions, heteroscedastic functional forms, and overdispersion can have a substantial effect on consumer surplus estimates.     

Investigating the US consumer credit determinants using linear and non-linear cointegration techniques

This paper has investigated the determinants of total consumer credit for the USA over the period 1968:Q1 to 2011:Q3. Using Breitung's (2001) non-parametric rank tests, we find the existence of linear cointegrating relationships in the consumer credit models. Enders and Siklos' (2001) threshold adjustment tests revealed that non-linearity is present slightly (with a statistical significance of 10% level) in the consumer credit model with a short-term interest rate (federal funds rate), while there exists a linear and symmetric cointegrating relationship in the models with medium (3 years) and long (10 years) term interest rates. Application of the linear cointegrating techniques (fully modified OLS, canonical cointegrating regression and general to specific) show that consumer credit responds more significantly to the medium and long-term interest rates than the short-term interest rate. We use these results to assess the popular belief that abnormality in the consumer credit set the stage for the 2007–08 crisis and severe recession.     

Copper Price Behaviour and the London Metal Exchange

This paper examines how variables which describe the expectations of consumers can contribute to the explanation of observed expenditure patterns and how measured series of such expectations can be used in a forecasting model to improve the prediction of short-term consumer expenditures. The expectations data are based on the British Market Research Bureau's Financial Expectations Survey and the respective series that are derived are tested in correlation and regression exercises against quarterly aggregate consumer expenditure series. The exercise finds that the information contained in these financial expectations has significant value for predicting expenditures in the period 1 to 12 months ahead. The forecasting models based on the expectational data generally perform as well as those based on conventional economic variables and the leading indicator properties of the expectations, combined with their rapid availability, enhance their value as a potential source of forecasting information.     

The analysis of consumer demand in Greece. Model selection and dynamic specification

The paper analyses the pattern of consumer demand in Greece exploring systematically the questions of the functional form of demand that best fits the data, the appropriate dynamic structure and the empirical validity of the constraints of demand theory. A general dynamic Almost Ideal demand model for four categories of consumer non-durables for the period 1958–1994 is estimated. The maintained specification rejects the static AI, its counterparts implied by the partial adjustment and autoregressive disturbances models and, upon applying a non-nested test, the Rotterdam specification. However, it cannot reject homogeneity and symmetry nor the hypothesis of structural stability.     

The interest elasticity of household savings: a structural approach with German micro data

This paper empirically investigates the effects of changes in the interest rate as well as in the current and expected future consumer price levels on households’ consumption–savings decision. In a structural demand model applied to German consumption data, we use cross-sectional and longitudinal variation in prices and tax rates to construct individual after-tax interest rates and cluster-specific consumer prices. We find that the compensated own-price elasticities for savings as well as consumption are significantly negative, while the theoretical model implications of homogeneity and symmetry must be rejected. Importantly, we estimate the uncompensated interest rate elasticity of savings, in line with the literature, at around zero. Some heterogeneity in this elasticity is found along the savings and wealth distribution. We conclude that short-term policy-induced variation of net returns to savings is expected to have no significant effects on the level of compound savings.     

有机食品购买的主要影响因素分析——基于城市消费者的调查统计

通过梳理有机食品消费研究的相关文献,从而建立影响有机食品购买决策的理论模型,然后运用相关分析和Logit模型对城市消费者有机蔬菜消费的调研数据进行数理统计分析。研究结果显示,消费者受教育程度、消费者收入、消费者对有机食品认知水平、消费者在食品购买中对安全性的要求、消费者对有机食品的感知价值、消费者对有机食品的态度是影响消费者购买有机食品的主要因素。     

中国GDP最终消费的长期均衡与短期波动的协整分析

本文依据协整理论和误差修正模型 ,测定了我国GDP最终消费与国内生产总值、价格水平及利率之间的长期均衡关系和短期波动效应 ,并对当前消费需求疲软做出了新的解释     

Limited Consumer Attention in International Trade

This paper introduces a model of limited consumer attention into an otherwise standard new trade theory model with love‐of‐variety preferences and heterogeneous firms. In this setting, we show that international integration needs not be welfare enhancing if the consumers' capacity to gather and process information is limited. Rather, it intensifies competition for scarce consumer attention, which causes mutual overbidding of producers in their advertising expenditures. The mutual overbidding renders advertising—which is informative in principle—wasteful and diverts purchases to imported goods at an inefficient scale. Wasteful advertising provides scope for policy intervention in the form of an advertising tax. However, if the tax instrument is not allowed to discriminate against foreign producers, it cannot eliminate inefficient diversion of consumer purchases to imports; hence it needs not be successful in securing gains from international integration in this framework.     

The aggregate elasticity of factor substitution with middle products

The elasticity of substitution between factors in production relates the change in the ratio of factors used in a production process to a given change in the factor price ratio. An aggregate concept of such an elasticity relates a change in overall factor endowments to the resulting change in factor prices. For a closed economy the behavior of consumers is an important part of such an aggregate elasticity, since endowment changes can bring about changes in commodity prices and resulting adjustments to factor prices. For a small open economy, commodity prices in typical models are exogenous. In the model with middle products, all final consumer goods are non-traded, so that local consumer behavior can affect factor prices. The aggregate elasticity of substitution is shown to be an average of production elasticities and demand elasticity even for a small open economy.     

Estimating consumer demand in Korea

In this paper, time series annual data on five consumer goods for Korea are analyzed using the neoclassical model of consumer behavior. The approach taken is the indirect utility function and employs a translog form. Various restrictive specifications of consumer preferences with respect to homotheticity and separability are examined and rejected by the likelihood ratio test. Income and price elasticities are estimated, which appear to be generally high relative to those of developed countries. Growth in real income is primarily responsible for changes in commodity demand. Marginal utilities of income and associated income elasticities are calculated, which are consistent with normal expectations.     

中国电信服务市场准入管制的随机试验模型分析

文章针对我国电信市场的行业特征,在充分讨论消费者选择和企业决策的基础上构建了一个N次多期迭代的基于随机试验的模型,模拟政府管制政策影响下的市场演化,以判断当前的市场准入管制是否有效率。研究结论认为:在技术存量不足和创新效率不高的条件下,依靠外国资本无法提高本国的消费者利益和最优技术存量。不仅如此,中国电信企业将因此而失去对本国市场的主导地位和控制力,所以我国暂不具备允许外资设立独资电信企业的条件。