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A general expenditure system for estimation of consumer demand functions

Author

Listed:
  • Simona Bigerna

    (University of Perugia)

  • Carlo Andrea Bollino

    (University of Perugia)

  • Maria Chiara D’Errico

    (University of Perugia)

Abstract

The class of flexible functional forms for the utility and cost function has been characterized by the pioneering work of Gorman (Some Engel curves. In: Deaton A (ed) Essays in the theory and measurement of consumer behaviour. Cambridge Univ. Press, Cambridge, 1981), known as the Gorman polar form. Despite several decades have elapsed, the economic literature has not found the most general functional form that satisfies Gorman’s theorem. This note provides a new general theoretical and parametric formulation of demand functions, labeled general expenditure system (GES), satisfying the Gorman requirement that the Engel curve cannot exceed a polynomial of third degree in expenditure. Estimates show that the GES is a significant generalization of previous popular flexible functions.

Suggested Citation

  • Simona Bigerna & Carlo Andrea Bollino & Maria Chiara D’Errico, 2020. "A general expenditure system for estimation of consumer demand functions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 1071-1088, October.
    • Handle: RePEc:spr:epolit:v:37:y:2020:i:3:d:10.1007_s40888-019-00154-8
    DOI: 10.1007/s40888-019-00154-8
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    More about this item

    Keywords

    Integrable demand functions; General expenditure system; Gorman polar form;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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