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Price and Income Elasticities in LAC Countries: The Importance of Domestic Production

Author

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  • Carla Canelas

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • François Gardes

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Silvia Salazar

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

The inclusion of time in the household domestic production function allows to calculate full prices that are in turn used to estimate consistent monetary and time elasticities on micro cross-sectional data. This article provides elasticity estimates for different commodity groups in absence of observable price data, solving the persistent problem of price data availability in most developing countries. The estimated price elasticities perform well compared to other methods and can be computed for different sub-populations, which is important for policy design and the calibration of simulation models.

Suggested Citation

  • Carla Canelas & François Gardes & Silvia Salazar, 2014. "Price and Income Elasticities in LAC Countries: The Importance of Domestic Production," Post-Print halshs-01020350, HAL.
    • Handle: RePEc:hal:journl:halshs-01020350
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01020350
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    References listed on IDEAS

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    1. 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.
    2. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    3. Carla Canelas & François Gardes & Silvia Salazar, 2013. "A Microsimulation on Tax Reforms in LAC Countries: A New Approach Based on Full Expenditures," Post-Print halshs-00881014, HAL.
    4. Pashardes, Panos, 1993. "Bias in Estimating the Almost Ideal Demand System with the Stone Index Approximation," Economic Journal, Royal Economic Society, vol. 103(419), pages 908-915, July.
    5. Gardes, Francois & Duncan, Greg J. & Gaubert, Patrice & Gurgand, Marc & Starzec, Christophe, 2005. "Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of U.S. and Polish Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 242-253, April.
    6. Thomas L. Cox & Michael K. Wohlgenant, 1986. "Prices and Quality Effects in Cross-Sectional Demand Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 908-919.
    7. François Gardes, 2014. "Full price elasticities and the value of time: A Tribute to the Beckerian model of the allocation of time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00973418, HAL.
    8. Carla Canelas & François Gardes & Silvia Salazar, 2013. "A Microsimulation on Tax Reforms in LAC Countries: A New Approach Based on Full Expenditures," Documents de travail du Centre d'Economie de la Sorbonne 13061, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    9. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    10. François Gardes, 2014. "Full price elasticities and the value of time: A Tribute to the Beckerian model of the allocation of time," Post-Print halshs-00973418, HAL.
    11. Carla Canelas & François Gardes & Silvia Salazar, 2013. "A Microsimulation on Tax Reforms in LAC Countries: A New Approach Based on Full Expenditures," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881014, HAL.
    12. François Gardes, 2014. "Full price elasticities and the value of time: A tribute to the Beckerian model of the allocation of time," Documents de travail du Centre d'Economie de la Sorbonne 14014, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
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    Cited by:

    1. Okay Gunes, 2017. "Analysis of Households' Decision Using Full Demand Elasticity Estimates: an Estimation on Turkish Data," Post-Print halshs-01491970, HAL.
    2. Carla Canelas & François Gardes & Philip Merrigan & Silvia Salazar, 2019. "Are time and money equally substitutable for all commodity groups in the household’s domestic production?," Review of Economics of the Household, Springer, vol. 17(1), pages 267-285, March.
    3. Okay Gunes, 2017. "Analysis of Households' Decision Using Full Demand Elasticity Estimates: an Estimation on Turkish Data," Documents de travail du Centre d'Economie de la Sorbonne 17017, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Okay Gunes, 2017. "Analysis of Households' Decision Using Full Demand Elasticity Estimates: an Estimation on Turkish Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01491970, HAL.

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    More about this item

    Keywords

    demand elasticities; domestic production; time-use; demande du consommateur; bien-être; micro-simulation; impôts; emploi du temps; prix complet;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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