Hideo Kozumi () (Faculty of Economics and Business Administration, Hokkaido University, Nishi 7, Kita 9, Kita-ku, Sapporo 060-0809, Japan) Noriko Hashimoto () (Faculty of Economics, Kansai University, 3-3-35 Yamata, Suita, Osaka 564-8680, Japan) Hikaru Hasegawa () (Faculty of Economics and Business Administration, Hokkaido University, Nishi 7, Kita 9, Kita-ku, Sapporo 060-0809, Japan)
Abstract
The paper introduces Bayesian inference into a demand model. This allows us to test for the negativity condition of the substitution matrix which is difficult to handle directly in the traditional approach. To illustrate the Bayesian inference procedures, we estimate the Rotterdam model and test the demand properties using Japanese data. The empirical results show the importance of specifically considering negativity in demand analysis.
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Find related papers by JEL classification: C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Bayesian Analysis D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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