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Preference shifts and the change of consumption composition

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  • Addessi, William

Abstract

While most of the literature explaining the change in consumption composition has focused on the role of relative prices and non-homothetic preferences, this paper examines the importance of preference shifts. I introduce dynamics in preferences and find that they play a relevant role and that their exclusion worsens model performance at least as much as the exclusion of allowing non-homothetic preferences.

Suggested Citation

  • Addessi, William, 2014. "Preference shifts and the change of consumption composition," Economics Letters, Elsevier, vol. 125(1), pages 14-17.
    • Handle: RePEc:eee:ecolet:v:125:y:2014:i:1:p:14-17
    DOI: 10.1016/j.econlet.2014.08.001
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    References listed on IDEAS

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    Cited by:

    1. Chen, Y.-H. Henry & Paltsev, Sergey & Reilly, John M. & Morris, Jennifer F. & Babiker, Mustafa H., 2016. "Long-term economic modeling for climate change assessment," Economic Modelling, Elsevier, vol. 52(PB), pages 867-883.
    2. William Addessi & Manuela Pulina & Federico Sallusti, 2017. "Impact of Changes in Consumer Preferences on Sectoral Labour Reallocation: Evidence from the Italian Economy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(3), pages 348-365, June.
    3. Addessi, William, 2018. "Population age structure and consumption expenditure composition: Evidence from European countries," Economics Letters, Elsevier, vol. 168(C), pages 18-20.

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    More about this item

    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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