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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

Author

Listed:
  • François Gardes

    (CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Greg Duncan

    (Northwestern U. - Northwestern University [Evanston])

  • Patrice Gaubert

    (SAMOS - Statistique Appliquée et MOdélisation Stochastique - UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Marc Gurgand

    (DELTA - Département et Laboratoire d'Economie Théorique et Appliquée - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

  • Christophe Starzec

    (TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

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.

Suggested Citation

  • François Gardes & Greg Duncan & Patrice Gaubert & Marc Gurgand & Christophe Starzec, 2005. "Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of American and Polish Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00176109, HAL.
    • Handle: RePEc:hal:cesptp:hal-00176109
    DOI: 10.1198/073500104000000587
    Note: View the original document on HAL open archive server: https://hal.science/hal-00176109v1
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    References listed on IDEAS

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