Engel's Law and Cointegration
A time-series counterpart of Engel's law is that the expenditure share on food declines as the economy grows. The main purpose of this paper is to test whether Houthakker's addilog utility function can simultaneously explain this time-series observation and cross-sectional observations concerning Engel's law. Masao Ogaki and Joon Y. Park's cointegration approach is used to estimate parameters of the utility function from time-series data. Total expenditure elasticities implied.by the estimated addilog utility function are compared with estimates of the elasticities from cross-sectional data. Copyright 1992 by University of Chicago Press.
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