Estimating and testing preferences for consumption, work hours and savings using the PSID, the profit function and the true dynamic budget constraint
AbstractFive waves of the Panel Study of Income Dynamics (PSID), 1985-1989 including both wealth supplements, are used to construct an intertemporal budget constraint for selected single headed households. A new functional form of the dual consumer profit function rationalizing consumption, labor supply and savings is specified, estimated and used to test commonly maintained separability hypotheses. Both consumption- labor and time separability are rejected. Cross-price Frisch elasticities are found not to equal zero and this in turns affects all estimates of consumption, labor supply and saving elasticities.
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 EconWPA in its series Microeconomics with number 0312005.
Length: 46 pages
Date of creation: 16 Dec 2003
Date of revision:
Note: Type of Document - word doc; prepared on Windows 2000; pages: 46; figures: 5. Word 2002 document
Contact details of provider:
Web page: http://18.104.22.168
intertemporal; consumption; labor; labour; wealth; savings; PSID; Panel Study of Income Dynamics; consumer profit function;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-12 (All new papers)
- NEP-DGE-2004-01-12 (Dynamic General Equilibrium)
- NEP-MIC-2004-01-12 (Microeconomics)
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.:
- Blackorby, Charles & Primont, Daniel & Russell, R. Robert, 1977. "On testing separability restrictions with flexible functional forms," Journal of Econometrics, Elsevier, vol. 5(2), pages 195-209, March.
- Barnett, William A & Hahm, Jeong Ho, 1994. "Financial-Firm Production of Monetary Services: A Generalized Symmetric Barnett Variable-Profit-Function Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 33-46, January.
- Lewbel, Arthur, 1991. "The Rank of Demand Systems: Theory and Nonparametric Estimation," Econometrica, Econometric Society, vol. 59(3), pages 711-30, May.
- David L. Ryan & Terence J. Wales, 1999.
"Flexible And Semiflexible Consumer Demands With Quadratic Engel Curves,"
The Review of Economics and Statistics,
MIT Press, vol. 81(2), pages 277-287, May.
- David L. Ryan & Terence J. Wales, . "Flexible and Semiflexible Consumer Demands With Quadratic Engel Curves," Old UBC Departmental Papers 9630, UBC Department of Economics.
- Banks, J & Blundell, R & Lewbel, A, 1997.
"Quadratic engel curves and consumer demand,"
Open Access publications from University College London
http://discovery.ucl.ac.u, University College London.
- Altonji, Joseph G, 1986. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S176-S215, June.
- Cooper, Russel J., 1994. "On the exploitation of additional duality relationships in consumer demand analysis," Economics Letters, Elsevier, vol. 44(1-2), pages 73-77.
- Cooper, Russel J. & McLaren, Keith R. & Wong, Gary K. K., 2001. "On the empirical exploitation of consumers' profit functions in static analyses," Economics Letters, Elsevier, vol. 72(2), pages 181-187, August.
- Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-43, May.
- Barnett, William A, 1983. "New Indices of Money Supply and the Flexible Laurent Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(1), pages 7-23, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.