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Gorman Revisited: Nonparametric Conditions for Exact Linear Aggregation

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  • Laurens Cherchye
  • Ian Crawford
  • Bram De Rock
  • Frederic Vermeulen

Abstract

In the tradition of Afriat (1967), Diewert (1973) and Varian (1982), we provide arevealed preference characterisation of exact linear aggregation. This guarantees thataggregate demand can be written as a function of prices and aggregate income alone,while abstracting from income-distributional aspects. We also establish nonparametricconditions for individual consumption to be representable in terms of Gorman PolarForm preferences. Our results are simple and complement those of Gorman (1953,1961). We illustrate the practical usefulness of our results by means of an empiricalapplication to a Spanish balanced microdata panel.

Suggested Citation

  • Laurens Cherchye & Ian Crawford & Bram De Rock & Frederic Vermeulen, 2015. "Gorman Revisited: Nonparametric Conditions for Exact Linear Aggregation," Working Papers ECARES ECARES 2015-45, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/221188
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    References listed on IDEAS

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    Cited by:

    1. Ian Crawford & Bram De Rock, 2014. "Empirical Revealed Preference," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 503-524, August.

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