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An empirical comparison of flexible demand system functional forms

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  • Douglas Fisher

    (Department of Economics, North Carolina State University, Raleigh, North Carolina 27695-7506, USA)

  • Adrian R. Fleissig

    (Department of Economics, California State University, Fullerton, CA 92834-6848, USA)

  • Apostolos Serletis

    (Department of Economics, The University of Calgary, Calgary, Alberta T2N 1N4, Canada)

Abstract

This paper compares the performance of eight frequently used flexible forms that are either (1) locally flexible, (2) 'effectively globally regular', or (3) asymptotically globally flexible. Results show that the functions with global properties generally perform better, particularly those models having asymptotic properties. Results, using US consumption data, indicate substitutability among the components of consumption at most data points. There is also some interesting substitution volatility around the time of recessions in the USA. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Douglas Fisher & Adrian R. Fleissig & Apostolos Serletis, 2001. "An empirical comparison of flexible demand system functional forms," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(1), pages 59-80.
    • Handle: RePEc:jae:japmet:v:16:y:2001:i:1:p:59-80
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    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other

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