IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/90353.html
   My bibliography  Save this paper

Elasticities under multi-stage budgeting

Author

Listed:
  • Zeelenberg, Kees

Abstract

Under multi-stage budgeting, the consumer allocates his income first to groups of goods (the highest stage), then for each group the expenditure to subgroups (the next-highest stage), etc, until finally the expenditure on the goods has been allocated (the lowest stage). This paper derives expressions that relate the price and income substitution and the elasticities of substitution of the demand for goods to the corresponding elasticities of the demand for groups at each stage. In particular, it is shown that the elasticity of substitution between two goods is equal to a weighted sum of the elasticities of substitution at the stages, modified for within-stage income effects.

Suggested Citation

  • Zeelenberg, Kees, 1988. "Elasticities under multi-stage budgeting," MPRA Paper 90353, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90353
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/90353/1/MPRA_paper_90353.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    2. Keller, Wouter J., 1976. "A nested CES-type utility function and its demand and price-index functions," European Economic Review, Elsevier, vol. 7(2), pages 175-186, February.
    3. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, number 9780226036335, December.
    4. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "Introduction to "A General Equilibrium Model for Tax Policy Evaluation"," NBER Chapters, in: A General Equilibrium Model for Tax Policy Evaluation, pages 1-5, National Bureau of Economic Research, Inc.
    5. Blackorby, Charles & Boyce, Richard & Russell, R Robert, 1978. "Estimation of Demand Systems Generated by the Gorman Polar Form: A Generalization of the S-Branch Utility Tree," Econometrica, Econometric Society, vol. 46(2), pages 345-363, March.
    6. Sato, Kazuo, 1972. "Additive Utility Functions with Double-Log Consumer Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 80(1), pages 102-124, Jan.-Feb..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zeelenberg, Kees, 1986. "Elasticities under two-stage budgeting," MPRA Paper 89262, University Library of Munich, Germany.
    2. Boyd, Roy & Uri, Noel D., 1994. "The effects of an increase in the motor fuels excise tax on the U.S. economy," Energy, Elsevier, vol. 19(2), pages 211-226.
    3. Uri, Noel D. & Boyd, Roy, 1998. "Aggregate impacts of the proposed reduction in the motor fuels excise tax in the United States1," Energy Economics, Elsevier, vol. 20(3), pages 309-323, June.
    4. Noel D. Uri & Roy Boyd, 1997. "The Effects of Reducing the Motor Fuels Excise Tax on Agriculture in the United States," Energy & Environment, , vol. 8(1), pages 45-63, March.
    5. Boyd, Roy & Uri, Noel D., 1989. "Assessing the impact of an oil import fee," Energy, Elsevier, vol. 14(1), pages 29-44.
    6. Heyndrickx, Christophe & Ivanova, Olga & Vanherle, Kris, 2008. "On the construction and first empirical application of the new European Model for the Assessment of Environmental, Economic and Social effects of Sustainability Policies (EDIP)," Conference papers 330240, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Richards, Timothy J. & Patterson, Paul M., 2000. "New Varieties And The Returns To Commodity Promotion: The Case Of Fuji Apples," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), pages 1-14, April.
    8. Govinda R. Timilsina & Ram M. Shrestha, 2002. "General equilibrium analysis of economic and environmental effects of carbon tax in a developing country: case of Thailand," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 5(3), pages 179-211, September.
    9. Wiese, Arthur M., 1994. "Contructing Data for Use in Applied General Equilibrium Models from the U.S. National Income and Product Accounts: An ERS Data Base," Staff Reports 278749, United States Department of Agriculture, Economic Research Service.
    10. Céline DE QUATREBARBES & Luc SAVARD & Dorothée BOCCANFUSO, 2011. "Can the removal of VAT Exemptions support the Poor? The Case of Niger," Working Papers 201106, CERDI.
    11. Richards, Timothy J. & Patterson, Paul M., 1998. "New Varieties and the Returns to Commodity Promotion: Washington Fuji Apples," Working Papers 28541, Arizona State University, Morrison School of Agribusiness and Resource Management.
    12. Holmoy, Erling & Vennemo, Haakon, 1995. "A general equilibrium assessment of a suggested reform in capital income taxation," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 531-556, December.
    13. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
    14. Engel, Eduardo M. R. A. & Galetovic, Alexander & Raddatz, Claudio E., 1999. "Taxes and income distribution in Chile: some unpleasant redistributive arithmetic," Journal of Development Economics, Elsevier, vol. 59(1), pages 155-192, June.
    15. Robinson, Sherman & Yunez-Naude, Antonio & Hinojosa-Ojeda, Raul & Lewis, Jeffrey D. & Devarajan, Shantayanan, 1999. "From stylized to applied models:: Building multisector CGE models for policy analysis," The North American Journal of Economics and Finance, Elsevier, vol. 10(1), pages 5-38.
    16. Zhai, Fan, 2007. "Armington Meets Melitz: Introducing Firm Heterogeneity in Global CGE Model of Trade," Conference papers 331646, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Leslie E. Papke, 1993. "What Do We Know about Enterprise Zones?," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 37-72, National Bureau of Economic Research, Inc.
    18. Don Fullerton & Yolanda Kodrzycki Henderson, 1987. "The Impact of Fundamental Tax Reform on the Allocation of Resources," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 401-444, National Bureau of Economic Research, Inc.
    19. John P. Formby & Steven G. Medema & W. James Smith, 1995. "Tax Neutrality and Social Welfare in a Comptutational General Equilibrium Framework," Public Finance Review, , vol. 23(4), pages 419-447, October.
    20. World Bank, 2001. "Mexico Energy Environment Review," World Bank Publications - Reports 20297, The World Bank Group.

    More about this item

    Keywords

    multi-stage budgeting; two-stage budgeting; separability; price elasticities; income elasticities;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:90353. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.