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The Distribution of Consumption-Expenditure Budget Shares. Evidence from Italian Households

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Author Info
Matteo Barigozzi
Lucia Alessi
Marco Capasso
Giorgio Fagiolo

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Abstract

This paper explores the statistical properties of household consumption-expenditure budget shares distributions (HBSDs) ---defined as the share of household total expenditure spent for purchasing a specific category of commodities--- for a large sample of Italian households in the period 1989-2004. We find that HBSDs are fairly stable over time for each specific category, but profoundly heterogeneous across commodity categories. We then derive a parametric density that is able to satisfactorily characterize HBSDs and: (i) is consistent with the observed statistical properties of the underlying levels of household consumption-expenditure distributions; (ii) can accommodate the observed across-category heterogeneity in HBSDs. Finally, we taxonomize commodity categories according to the estimated parameters of the proposed density. We show that the resulting classification is consistent with the traditional economic scheme that labels commodities as necessary, luxury or inferior.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2008/18.

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Date of creation: 20 Sep 2008
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Handle: RePEc:ssa:lemwps:2008/18

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Related research
Keywords: Household Consumption Expenditure; Budget Shares; Sum of Log-Normal Distributions;

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  1. Andrea Brandolini, 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(2), pages 183-239, September.
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  2. Giorgio Fagiolo & Lucia Alessi & Matteo Barigozzi & Marco Capasso, 2007. "On the distributional properties of household consumption expenditures. The case of Italy," LEM Papers Series 2007/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  3. Attanasio, Orazio P., 1999. "Consumption," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 11, pages 741-812 Elsevier. [Downloadable!] (restricted)
  4. Giorgio Fagiolo & Mauro Napoletano & Andrea Roventini, 2008. "Are output growth-rate distributions fat-tailed? some evidence from OECD countries," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 639-669. [Downloadable!]
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  5. Richard Blundell & Xiaohong Chen & Dennis Kristensen, 2007. "Semi-Nonparametric IV Estimation of Shape-Invariant Engel Curves," Econometrica, Econometric Society, vol. 75(6), pages 1613-1669, November. [Downloadable!] (restricted)
  6. Richard Blundell & Xiaohong Chen & Dennis Kristensen, 2003. "Nonparametric IV estimation of shape-invariant Engel curves," CeMMAP working papers CWP15/03, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
  7. Francesco Caselli & Jaume Ventura, 2000. "A Representative Consumer Theory of Distribution," American Economic Review, American Economic Association, vol. 90(4), pages 909-926, September. [Downloadable!] (restricted)
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  8. Kirman, Alan P, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-36, Spring. [Downloadable!] (restricted)
  9. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November. [Downloadable!] (restricted)
  10. Erich Battistin & Richard Blundell & Arthur Lewbel, 2007. "Why is Consumption More Log Normal Than Income? Gibrat's Law Revisited," Boston College Working Papers in Economics 671, Boston College Department of Economics. [Downloadable!]
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  11. Erich Battistin & Raffaele Miniaci & Guglielmo Weber, 2003. "What do we learn from recall consumption data?," Temi di discussione (Economic working papers) 466, Bank of Italy, Economic Research Department. [Downloadable!]
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  12. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March. [Downloadable!] (restricted)
  13. Bottazzi, Giulio & Dosi, Giovanni & Fagiolo, Giorgio & Secchi, Angelo, 2008. "Sectoral and geographical specificities in the spatial structure of economic activities," Structural Change and Economic Dynamics, Elsevier, vol. 19(3), pages 189-202, September. [Downloadable!] (restricted)
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  14. Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the Distribution of Firm Growth Rates," RAND Journal of Economics, The RAND Corporation, vol. 37(2), pages 235-256, Summer.
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  15. A. Chai & A. Moneta, 2008. "At the Origins of Engel Curves Estimation," Papers on Economics and Evolution 2008-02, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
  16. Andreas Chai & Alessio Moneta, 2009. "Satiation, Escaping Satiation, and Structural Change: Some Evidence from the Evolution of Engel Curves," Papers on Economics and Evolution 2008-18, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
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