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Differential consumer demand systems

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  • Keller, W.J.
  • Van Driel, J.

Abstract

It is shown in this paper that several well-known systems like the Rotterdam model and the Almost Ideal Demand System can be seen as different parametrizations of the budget share differential equation. Using a third parametrization a new system, called the CBS system, is developed and discussed. Special attention is given to the relative price version of the system and in particular to the special case of preference independence. Some estimates for the Netherlands based on time series for 1953–1981, using various approaches, are presented.

Suggested Citation

  • Keller, W.J. & Van Driel, J., 1985. "Differential consumer demand systems," European Economic Review, Elsevier, vol. 27(3), pages 375-390.
    • Handle: RePEc:eee:eecrev:v:27:y:1985:i:3:p:375-390
    DOI: 10.1016/S0014-2921(85)80021-0
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    References listed on IDEAS

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    1. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
    2. de Boer, P. M. C. & Harkema, R., 1983. "Undersized Samples And Maximum Likelihood Estimation Of Sum-Constrained Linear Models," Econometric Institute Archives 272283, Erasmus University Rotterdam.
    3. Byron, R. P., 1984. "On the flexibility of the Rotterdam model," European Economic Review, Elsevier, vol. 24(3), pages 273-283, April.
    4. Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
    5. BARTEN, Anton P., 1969. "Maximum likelihood estimation of a complete system of demand equations," LIDAM Reprints CORE 34, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Sato, Kazuo, 1972. "Additive Utility Functions with Double-Log Consumer Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 80(1), pages 102-124, Jan.-Feb..
    7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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