Flexible but Parsimonious Demand Designs: The Case of Gasoline
AbstractIn this paper, we consider expectations of the form E[log(y)|x] = a'log(x) as a good starting point for a more general analysis. We show why this naturally leads to the following flexible functional form E[y|x] = f(h(x)), where all functions are estimated by cubic splines. One of the main goals is to show that this estimator is straightforward to implement. We demonstrate the usefulness of the methods given in the paper by estimating gasoline demand from the 1994 RTECS data set, and in doing so, uncover interesting relationships of income and age on expected gasoline use.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 00-07.
Date of creation: 2000
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Find related papers by JEL classification:
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
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