The Normalized Quadratic Expenditure Function
AbstractA concise introduction to the Normalized Quadratic expenditure or cost function is provided so that the interested reader will have the necessary information to understand and use this functional form. The Normalized Quadratic is an attractive functional form for use in empirical applications as correct curvature can be imposed in a parsimonious way without losing the desirable property of flexibility. We believe it is unique in this regard. Topics covered included the problem of cardinalizing utility, the modeling of nonhomothetic preferences, the use of spline functions to achieve greater flexibility and the use of a â€œsemiflexibleâ€ approach to make it feasible to estimate systems of equations with a large number of commodities.
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Bibliographic InfoPaper provided by Vancouver School of Economics in its series Economics working papers with number erwin_diewert-2009-3.
Length: 36 pages
Date of creation: 09 Jan 2009
Date of revision: 09 Jan 2009
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Web page: http://www.economics.ubc.ca/
Normalized Quadratic; expenditure function; flexible functional forms; elasticities.;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
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