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Building Gorman's Nest

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  • LaFrance, Jeffrey T.
  • Beatty, Timothy K. M.
  • Pope, Rulon D.

Abstract

Gorman Engel curves are extended to incomplete systems. The roles of Slutsky symmetry and homogeneity/adding up are isolated in the rank and functional form restrictions for Gorman systems. Symmetry determines the rank condition. The maximum rank is three for incomplete and complete systems. Homogeneity/adding up determines the functional form restrictions in complete systems. There is no restriction on functional form in an incomplete system. Every full rank and minimal deficit reduced rank Gorman system has a representation as a polynomial in a single function of income. This generates a complete taxonomy of indirect preferences for Gorman systems. Using this taxonomy, we develop models of incomplete Gorman systems that nest rank and functional form and satisfy global regularity conditions. All results are completely derived with elementary and straightforward methods that should be of wide interest.

Suggested Citation

  • LaFrance, Jeffrey T. & Beatty, Timothy K. M. & Pope, Rulon D., 2004. "Building Gorman's Nest," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2ws698td, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt2ws698td
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    12. Beatty, Timothy & LaFrance, Jeffrey, 2001. "Income Elasticity and Functional Form," CUDARE Working Papers 198689, University of California, Berkeley, Department of Agricultural and Resource Economics.
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    Cited by:

    1. Hayley H. Chouinard & David E. Davis & Jeffrey T. LaFrance & Jeffrey M. Perloff, 2010. "Milk Marketing Order Winners and Losers," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 59-76.
    2. LaFrance, Jeffrey T., 2008. "The structure of US food demand," Journal of Econometrics, Elsevier, vol. 147(2), pages 336-349, December.
    3. Jeffrey LaFrance & Rulon Pope, 2008. "The Generalized Quadratic Expenditure System," Working Papers 2008-27, School of Economic Sciences, Washington State University.
    4. Eldon V. Ball & Ricardo Cavazos & Jeffrey T. LaFrance & Rulon Pope & Jesse Tack, 2010. "Aggregation and Arbitrage in Joint Production," Monash Economics Working Papers archive-22, Monash University, Department of Economics.

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    More about this item

    Keywords

    aggregation; functional form; incomplete demand systems; Gorman Engel curves; weak integrability;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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