Convergence of Consumption Patterns During Macroeconomic Transition: A Model of Demand in Ireland and the OECD
AbstractThis study uses country-level panel data on consumption in Ireland and seven other OECD countries to examine the evolution of Irish consumption patterns as Ireland underwent rapid macroeconomic growth. Consumption levels obviously increased due to substantially higher incomes, but it is less clear how the shares of different types of goods purchased have changed or whether Ireland's consumption mix has converged with that of other high-income countries. Rankings based on a simple distance measure of consumption similarity suggest that Ireland moved from a "low-income" pattern similar to Portugal or Greece to a "high-income" pattern like that of Canada between 1995 and 2003. Using static and dynamic Almost Ideal Demand System models, we first estimate long- and short-run Irish price and income elasticities for nine categories of commodities between 1976 and 2003. These results provide evidence of substantial habit formation in aggregate consumption. We then estimate a long-run cross-country model covering six aggregate commodity groups between 1975 and 2003. The analysis shows that Ireland's demand parameters remain more similar to those of Greece than to higher-income OECD countries in the sample. Although Ireland has overtaken most other OECD countries in per capita income, it is still converging to a higher-income consumption pattern. We foresee further convergence of Irish expenditure patterns towards a pattern typical of high-income countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP205.
Length: 34 pages
Date of creation: Aug 2007
Date of revision:
Macroeconomic transition; Almost Ideal Demand System; Consumption Patterns; Ireland; OECD;
Other versions of this item:
- Lyons, Sean & Mayor, Karen & Tol, Richard S.J., 2009. "Convergence of consumption patterns during macroeconomic transition: A model of demand in Ireland and the OECD," Economic Modelling, Elsevier, vol. 26(3), pages 702-714, May.
- Sean Lyons & Karen Mayor & Richard S.J. Tol, 2007. "Convergence Of Consumption Patterns During Macroeconomic Transition: A Model Of Demand In Ireland And The Oecd," Working Papers FNU-141, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2007.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- F15 - International Economics - - Trade - - - Economic Integration
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul Brenton, 1997.
"Estimates of the demand for energy using cross-country consumption data,"
Taylor & Francis Journals, vol. 29(7), pages 851-859.
- Brenton, P., 1995. "Estimates of the Demand for Energy Using Cross-Country Consumption Data," Discussion Papers 95-25, Department of Economics, University of Birmingham.
- Kenneth W. Clements & Yanrui Wu & Jing Zhang, 2004.
"Comparing International Consumption Patterns,"
Economics Discussion / Working Papers
04-04, The University of Western Australia, Department of Economics.
- Yu, Wusheng & Hertel, Thomas W. & Preckel, Paul V. & Eales, James S., 2004.
"Projecting world food demand using alternative demand systems,"
Elsevier, vol. 21(1), pages 99-129, January.
- Yu, Wusheng & Hertel, Thomas W. & Preckel, Paul V. & Eales, James S., 2003. "Projecting World Food Demand Using Alternative Demand Systems," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25905, International Association of Agricultural Economists.
- Yu, Wusheng & Hertel, Thomas & Preckel, Paul & Eales, James, 2003. "Projecting World Food Demand Using Alternative Demand Systems," GTAP Working Papers 1182, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Madden, David, 1996. "Marginal Tax Reform and the Specification of Consumer Demand Systems," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 556-67, October.
- Chang, Hui-Shung (Christie) & Bettington, Nicholas, 2001. "Demand for Wine in Australia: Systems Versus Single Equation Approach," Working Papers 12923, University of New England, School of Economics.
- de la Croix, David, 2001.
"Growth dynamics and education spending: The role of inherited tastes and abilities,"
European Economic Review,
Elsevier, vol. 45(8), pages 1415-1438, August.
- de la Croix, David, 1996. "Economic development and convergence clubs: the role of inherited tastes and human capital," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1996024, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Oct 1996.
- Becker, G.S., 1991.
"Habits, Addictions, and Traditions,"
University of Chicago - Economics Research Center
91-8, Chicago - Economics Research Center.
- Gary S. Becker, 1991. "Habits, Addictions, and Traditions," University of Chicago - George G. Stigler Center for Study of Economy and State 71, Chicago - Center for Study of Economy and State.
- John Eakins & Liam Gallagher, 2003. "Dynamic almost ideal demand systems: an empirical analysis of alcohol expenditure in Ireland," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1025-1036.
- Eliyathahby Antony Selvanathan & Saroja Selvanathan, 2003. "Similarities in the Consumption Patterns of the Five Asian Tigers," Asian Economic Journal, East Asian Economic Association, vol. 17(3), pages 297-323, 09.
- Herrmann, Roland & Roder, Claudia, 1995. "Does Food Consumption Converge Internationally? Measurement, Empirical Tests and Determinants," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 22(3), pages 400-414.
- Conrad, K & Schroder, M, 1991. "Demand for Durable and Nondurable Goods, Environmental Policy and Consumer Welfare," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 6(3), pages 271-86, July-Sept.
- Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen J. Turnovsky, 2004.
"Habit Formation, Catching Up with the Joneses, and Economic Growth,"
Journal of Economic Growth,
Springer, vol. 9(1), pages 47-80, 03.
- Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen Turnovsky, 2004. "Habit Formation, Catching Up with the Joneses, and Economic Growth," Working Papers UWEC-2004-09-P, University of Washington, Department of Economics, revised Jan 2004.
- Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
- Conniffe, Denis & Scott, Susan, 1990. "Energy Elasticities: Responsiveness of Demands for Fuels to Income and Price Changes," Research Series, Economic and Social Research Institute (ESRI), number GRS149.
- Brian P. Poi, 2002. "From the help desk: Demand system estimation," Stata Journal, StataCorp LP, vol. 2(4), pages 403-410, November.
- Johnson, James A, et al, 1992. "Short-Run and Long-Run Elasticities for Canadian Consumption of Alcoholic Beverages: An Error-Correction Mechanism/Cointegration Approach," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 64-74, February.
- Tridimas, George, 2000. "The analysis of consumer demand in Greece. Model selection and dynamic specification," Economic Modelling, Elsevier, vol. 17(4), pages 455-471, December.
- Hyland, Marie & Jennings, Anne & Tol, Richard S. J., 2012. "Trade, Energy, and Carbon Dioxide: An Analysis for the Two Economies of Ireland," Papers WP420, Economic and Social Research Institute (ESRI).
- Genovaitė Liobikienė & Justina Mandravickaitė, 2013. "Convergence of new members of the EU: changes in household consumption expenditure structure regarding environmental impact during the prosperous period," Environment, Development and Sustainability, Springer, vol. 15(2), pages 407-427, April.
- Dritan Osmani, . "A note on optimal transfer schemes, stable coalition for environmental protection and joint maximization assumption," Working Papers FNU-176, Research unit Sustainability and Global Change, Hamburg University.
- Nolan, Anne, 2010. "A dynamic analysis of household car ownership," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(6), pages 446-455, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sarah Burns).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.