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Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption : The Case of American and Polish Data

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  • François Gardes

    (Crest)

  • Greg J, Duncan

    (Crest)

  • Patrice Gaubert

    (Crest)

  • Christophe Starzec

    (Crest)

Abstract

The problem addressed in this article is the bias to income and expenditure elasticities estimated on pseudo-panel data caused by measurement error and unobserved heterogeneity. We gauge empirically these biases by comparing cross-sectional, pseudo-panel and true panel data from both Polish and American expenditure surveys. Our results suggest that unobserved heterogeneity imparts a downward bias to cross-section estimates of income elasticities of at-home food expenditures and an upward bias to estimates of income elasticities of away-from-home food expenditures. "Within" and first-difference estimators suffer less bias, but only if the effects of measurement error are accounted for with instrumental variables.
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Suggested Citation

  • François Gardes & Greg J, Duncan & Patrice Gaubert & Christophe Starzec, 2002. "Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption : The Case of American and Polish Data," Working Papers 2002-02, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2002-02
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    References listed on IDEAS

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    1. Zeldes, Stephen P, 1989. "Consumption and Liquidity Constraints: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 305-346, April.
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    6. Joseph G. Altonji & Aloysius Siow, 1987. "Testing the Response of Consumption to Income Changes with (Noisy) Panel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 293-328.
    7. Altug, Sumru & Miller, Robert A, 1990. "Household Choices in Equilibrium," Econometrica, Econometric Society, vol. 58(3), pages 543-570, May.
    8. Arellano, Manuel, 1989. "A note on the Anderson-Hsiao estimator for panel data," Economics Letters, Elsevier, vol. 31(4), pages 337-341, December.
    9. Gardes, Francois & Langlois, Simon & Richaudeau, Didier, 1996. "Cross-section versus time-series income elasticities of Canadian consumption," Economics Letters, Elsevier, vol. 51(2), pages 169-175, May.
    10. Verbeek, Marno & Nijman, Theo, 1993. "Minimum MSE estimation of a regression model with fixed effects from a series of cross-sections," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 125-136, September.
    11. Hall, Robert E & Mishkin, Frederic S, 1982. "The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households," Econometrica, Econometric Society, vol. 50(2), pages 461-481, March.
    12. Baltagi, Badi H., 1988. "An Alternative Heteroscedastic Error Components Model," Econometric Theory, Cambridge University Press, vol. 4(02), pages 349-350, August.
    13. Naik, Narayan Y & Moore, Michael J, 1996. "Habit Formation and Intertemporal Substitution in Individual Food Consumption," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 321-328, May.
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    Cited by:

    1. François Gardes, 1999. "L'apport de l'économétrie des panels et des pseudo-panels à l'analyse de la consommation," Économie et Statistique, Programme National Persée, vol. 324(1), pages 157-162.
    2. Richard Duhautois & Fabrice Gilles, 2013. "Payroll tax reductions and job flows in France," Working Papers hal-01006652, HAL.
    3. Carla Canelas & François Gardes & Silvia Salazar, 2014. "Price and Income Elasticities in LAC Countries: The Importance of Domestic Production," Documents de travail du Centre d'Economie de la Sorbonne 14038, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. David Aristei & Luca Pieroni, 2010. "Habits, Complementarities and Heterogeneity in Alcohol and Tobacco Demand: A Multivariate Dynamic Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(4), pages 428-457, August.
    5. Emrehan Aktug & Tolga Umut Kuzubas & Orhan Torul, 2017. "An Investigation of Labor Income Profiles in Turkey," Working Papers 2017/04, Bogazici University, Department of Economics.
    6. François Gardes & Imen Sayadi & Christophe Starzec, 2015. "The full equivalence scales: an estimation integrating the monetary and time dimensions of households’ expenditures
      [Les échelles d’équivalence complètes : une estimation intégrant les dimensions m
      ," PSE - Labex "OSE-Ouvrir la Science Economique" hal-01307097, HAL.
    7. Kim, Byung-Yeon & Kang, Youngho, 2014. "Social capital and entrepreneurial activity: A pseudo-panel approach," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 47-60.
    8. François Gardes & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01535172, HAL.
    9. François Gardes & Noël Thiombiano, 2017. "The value of time and expenditures of rural households in Burkina Faso: a domestic production framework," Documents de travail du Centre d'Economie de la Sorbonne 17027, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    10. repec:hal:journl:hal-00122817 is not listed on IDEAS
    11. Ileana NICULESCU-ARON & Ozge CAGCAG, 2012. "Household Saving In Western European Countries. A General Overview," Journal of Social and Economic Statistics, Bucharest University of Economic Studies, vol. 1(2), pages 48-58, DECEMBER.
    12. Juárez-Torres, Miriam, 2013. "The Impact of Food Price Shocks on the Consumption and Nutritional Patterns of Mexican Households," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150636, Agricultural and Applied Economics Association.
    13. Ermolova, Maria D. & Penikas, Henry I., 2016. "QAIDS Model Based on Russian Pseudo - Panel Data: Impact of 1998 and 2008 Crises," MPRA Paper 82876, University Library of Munich, Germany.
    14. Marie Cottrell & Patrice Gaubert, 2003. "Efficient estimators : the use of neural networks to construct pseudo panels," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00122817, HAL.
    15. Chiara Comolli & Fabrizio Bernardi, 2015. "The causal effect of the great recession on childlessness of white American women," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.

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