This paper attempts to find out the explanatory power of observed changes in the distribution of current income in explaining the relative change in aggregate consumption using the distributional approach of aggregation by Hildenbrand and Kneip (1999, 2001). The coefficients in the aggregate relation in each period can be estimated from cross-section data as an average derivative of the individual consumption relation without requiring a specific functional form of this relation and the time-invariance property needed in the time-series model of Davidson et al. (1978). We use the nonparametric Direct Average Derivative Estimation technique to estimate these coefficients of the aggregate relation in the Family Expenditure Survey of UK [1974-1993]. It turns out that for most of the commodity groups the inclusion of dispersion in the income distribution, in addition to the mean, improves the predictive power of the model.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number
bgse31_2001.
Length: 42 Date of creation: Nov 2001 Date of revision: Handle: RePEc:bon:bonedp:bgse31_2001
Contact details of provider: Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany Fax: +49 228 73 9221 Web page: http://www.bgse.uni-bonn.de/index.php?id=494
For technical questions regarding this item, or to correct its listing, contact: (Daniel Park).