A Demand System with Social Interactions: Evidence from CEX
AbstractA Quadratic Almost Ideal Demand System that allows for social interactions is described and then estimated on CEX data. Social interactions are introduced as mean budget shares and depend on peer membership and visibility. Peer identification is obtained by means of a similarity index which measures the probability of group membership. Reflection problem is tackled directly and therefore estimation is carried on with a Generalized Spatial 2SLS that deal with two types of endogeneity: the first due to contemporaneous choices of households, the second due to contemporaneous choice of goods. The results support the hypothesis that total expenditure allocation to budget shares depends both on social interaction and visibility.
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Bibliographic InfoPaper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2006_22.
Date of creation: 2006
Date of revision:
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Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Social Interactions; Demand System; Similarity; Endogeneity; Spatial Econometrics;
Find related papers by JEL classification:
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
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