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Minimum Sample Size Requirements For Maximum Likelihood Estimation Of Some Demand Models

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  • Harkema, R.

Abstract

The method of maximum likelihood is rather demanding, in the sense that a large number of observations is required in order to prevent the likelihood function from becoming unbounded. In this paper precise conditions are formulated such that the likelihood function associated with the Rotterdam model will be bounded under (a) conditions of homogeneity and symmetry and (b) the negativity condition. In addition it is shown that, surprisingly enough, the number of observations that is required to estimate the linear expenditure system is not smaller than the number that is required to estimate the Rotterdam model.

Suggested Citation

  • Harkema, R., 1985. "Minimum Sample Size Requirements For Maximum Likelihood Estimation Of Some Demand Models," Econometric Institute Archives 272292, Erasmus University Rotterdam.
    • Handle: RePEc:ags:eureia:272292
    DOI: 10.22004/ag.econ.272292
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    References listed on IDEAS

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    1. Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
    2. BARTEN, Anton P., 1969. "Maximum likelihood estimation of a complete system of demand equations," LIDAM Reprints CORE 34, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
    4. Rinnooy Kan, A. H. G., 1985. "Probabilistic Analysis Of Algorithms," Econometric Institute Archives 272328, Erasmus University Rotterdam.
    5. Brown, Bryan W, 1981. "Sample Size Requirements in Full Information Maximum Likelihood Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 443-459, June.
    6. de Boer, P. M. C. & Harkema, R., 1983. "Undersized Samples And Maximum Likelihood Estimation Of Sum-Constrained Linear Models," Econometric Institute Archives 272283, Erasmus University Rotterdam.
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