Frisch Demand Functions and Intertemporal Substitution in Consumption
AbstractThis paper delineates various intertemporal elasticities of consumption and provides a disaggregate analysis of intertemporal substitution in consumption from its constituent commodity demand. The analysis utilizes Frisch demand function in contrast to the consumption function employed in existing studies. Three intertemporal elasticities of consumption are identified--intertemporal price elasticities of demand, commodity-specific intertemporal substitution elasticities, and the intertemporal substitution elasticity of consumption. Previous studies do not distinguish these intertemporal elasticities and have disregarded the influences of commodity prices on intertemporal substitution. The evidence from estimating the Frisch demand system using U.K. expenditure data suggests the presence of low intertemporal substitution for commodities as well as consumption. Copyright 1993 by Ohio State University Press.
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Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 25 (1993)
Issue (Month): 3 (August)
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