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Estimation of the Consumption Function: A Systems Approach to Employment Effects on the Purchase of Durables

Author

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  • AcAleer, Michael
  • Powell, Alan
  • Dixon, Peter
  • Lawson, Tony

Abstract

This paper analyzes a systems approach to employment effects by formulating CONDELES, the aggregate consumption function associated with Durables in the Extended Linear Expenditure System. The complete system, with disposable income, prices, the real interest rate and lagged stocks is fitted to quarterly Australian data using full-information maximum likelihood. The results are mixed. Stable, significant estimates of subsistence parameters, marginal budget shares and the marginal propensity to consume are obtained. On the negative side, implausibly low marginal budget shares were found for durables and high positive serial correlation in the residuals remained.
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Suggested Citation

  • AcAleer, Michael & Powell, Alan & Dixon, Peter & Lawson, Tony, 1979. "Estimation of the Consumption Function: A Systems Approach to Employment Effects on the Purchase of Durables," Papers 295039, Impact Project Archive.
    • Handle: RePEc:ags:ircipa:295039
    DOI: 10.22004/ag.econ.295039
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    File URL: https://ageconsearch.umn.edu/record/295039/files/melbourne006.pdf
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    Cited by:

    1. Brian Parmenter, 2004. "Distinguished Fellow of the Economic Society of Australia, 2003: Peter Dixon," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 141-144, June.
    2. Fisher, Gordon & McAleer, Michael & Whistler, Diana, 1979. "A Note On Problems of Estimating the Linear Expenditure System and Its Related Forms," Queen's Institute for Economic Research Discussion Papers 275153, Queen's University - Department of Economics.
    3. Ross A. Williams, 1980. "Structural Change and Private Consumption:Evidence from the 1974–75 Household Expenditure Survey," The Economic Record, The Economic Society of Australia, vol. 56(152), pages 54-68, March.
    4. Philippa Dee, 1989. "The Effects of Government size on Economic Performance: a Quantitative Assessment of a Budget Reduction," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 22(1), pages 24-38, March.

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