Quadratic Engel Curves with Measurement Error: Evidence from a Budget Survey* |
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Authors: | Abbi Kedir Sourafel Girma |
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Institution: | 1. Department of Economics, University of Leicester, Leicester, UK (e-mail: ak138@le.ac.uk);2. Nottingham University Business School, Industrial Economics Division, Nottingham, UK (e-mail: sourafel.girma@nottingham.ac.uk) |
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Abstract: | This paper examines the importance of accounting for measurement error in total expenditure in the estimation of Engel curves, based on the 1994 Ethiopian Urban Household Survey. Using Lewbel's Review of Economics and Statistics (1996 ), Vol. 78, pp. 718–725] estimator for demand models with correlated measurement errors in the dependent and independent variables, we find robust evidence of a quadratic relationship between food share and total expenditure in the capital city, and significant biases in various estimators that do not correct for correlated measurement errors. |
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Keywords: | C14 C21 D12 I31 |
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