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Imposing Local Curvature Conditions in Flexible Demand System

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  • Moschini, GianCarlo

Abstract

By reparameterizing the basic translog and the log translog demand systems and exploiting the fact that the Slutsky matrix must be negative semidefinite but cannot he negative definite, it is shown that a recently proposed simple procedure to maintain locally the curvature property of consumer theory can be applied to these popular translog models as well. The proposed procedure can also be applied to other demand-system specifications such as, for example, the nonseparable generalized linear expenditure system.
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Suggested Citation

  • Moschini, GianCarlo, 1999. "Imposing Local Curvature Conditions in Flexible Demand System," Staff General Research Papers Archive 1745, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:1745
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    Cited by:

    1. Antonio Baselice & Antonio Stasi & Francesco Diotallevi & Andrea Marchini & Gianluca Nardone, 2014. "Crescita nei consumi di IV gamma. Un’applicazione del modello AIDS alla domanda italiana di ortofrutta," ECONOMIA AGRO-ALIMENTARE, FrancoAngeli Editore, vol. 16(2), pages 11-30.
    2. Barnett, William A. & Serletis, Apostolos, 2008. "Consumer preferences and demand systems," Journal of Econometrics, Elsevier, vol. 147(2), pages 210-224, December.
    3. Antonio Stasi & Francesco Diotallevi & Andrea Marchini, 2012. "Strategie di prezzo e profittabilità nel mercato degli oli extra-vergine di oliva: un modello di analisi attraverso gli scanner data," RIVISTA DI ECONOMIA AGRARIA, FrancoAngeli Editore, vol. 0(1), pages 69-88.
    4. GianCarlo Moschini, 2000. "Flexible Multistage Demand System Based on Indirect Separability, A," Center for Agricultural and Rural Development (CARD) Publications 00-wp265, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. William Barnett & Meenakshi Pasupathy, 2003. "Regularity of the Generalized Quadratic Production Model: A Counterexample," Econometric Reviews, Taylor & Francis Journals, vol. 22(2), pages 135-154.
    6. Guy Chapda Nana & Bruno Larue, 2014. "Imposing curvature conditions on flexible functional forms for GNP functions," Empirical Economics, Springer, vol. 47(4), pages 1411-1440, December.
    7. Serletis, Apostolos & Shahmoradi, Asghar, 2007. "A Note On Imposing Local Curvature In Generalized Leontief Models," Macroeconomic Dynamics, Cambridge University Press, vol. 11(02), pages 290-294, April.
    8. Ling-yun He & Li Liu, 2016. "The demand for road transport in China: imposing theoretical regularity and flexible functional forms selection," Papers 1612.02656, arXiv.org.
    9. Holt, Matthew T. & Goodwin, Barry K., 2009. "The Almost Ideal and Translog Demand Systems," MPRA Paper 15092, University Library of Munich, Germany.
    10. Fabienne Féménia & Alexandre Gohin, 2009. "Estimating censored and non homothetic demand systems: the generalized maximum entropy approach," Working Papers SMART - LERECO 09-12, INRA UMR SMART-LERECO.
    11. Feng, Guohua & Serletis, Apostolos, 2008. "Productivity trends in U.S. manufacturing: Evidence from the NQ and AIM cost functions," Journal of Econometrics, Elsevier, vol. 142(1), pages 281-311, January.
    12. Pieroni, Luca, 2009. "Does defence expenditure affect private consumption? Evidence from the United States," Economic Modelling, Elsevier, vol. 26(6), pages 1300-1309, November.
    13. Cranfield, J. A. L. & Pellow, Scott, 2004. "The role of global vs. local negativity in functional form selection: an application to Canadian consumer demands," Economic Modelling, Elsevier, vol. 21(2), pages 345-360, March.
    14. Arthur Lewbel & Serena Ng, 2005. "Demand Systems with Nonstationary Prices," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 479-494, August.
    15. Jakir Hussain & Jean-Thomas Bernard, 2016. "Flexible Functional Forms and Curvature Conditions: Parametric Productivity Estimation in Canadian and U.S. Manufacturing Industries," Working Papers 1612e, University of Ottawa, Department of Economics.
    16. Femenia, Fabienne & Gohin, Alexandre, 2007. "Estimating price elasticities of food trade functions: How relevant is the gravity approach?," Working Papers 7211, TRADEAG - Agricultural Trade Agreements.
    17. Chang, Dongfeng & Serletis, Apostolos, 2012. "Imposing local curvature in the QUAIDS," Economics Letters, Elsevier, vol. 115(1), pages 41-43.
    18. Charles J. Romeo, 2016. "Incorporating Prior Information into A GMM Objective For Mixed Logit Demand Systems," Journal of Industrial Economics, Wiley Blackwell, vol. 64(2), pages 336-363, June.
    19. Serletis, Apostolos & Shahmoradi, Asghar, 2010. "Consumption effects of government purchases," Journal of Macroeconomics, Elsevier, vol. 32(3), pages 892-905, September.
    20. Koebel, Bertrand M. & Falk, Martin & Laisney, François, 2000. "Imposing and testing curvature conditions on a Box-Cox function," ZEW Discussion Papers 00-70, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    21. C. L Chua & W. E. Griffiths & C. J O'Donnell, 2001. "Bayesian Model Averaging in Consumer Demand Systems with Inequality Constraints," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 49(3), pages 269-291, November.
    22. Ball, V. Eldon & Moss, Charles B. & Erickson, Kenneth W. & Nehring, Richard F., 2003. "Modeling Supply Response In A Multiproduct Framework Revisited: The Nexus Of Empirics And Economics," 2003 Annual meeting, July 27-30, Montreal, Canada 21981, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    23. Valeria Di Cosmo, 2011. "Are the Consumers Always Ready to Pay? A Quasi-Almost Ideal Demand System for the Italian Water Sector," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 25(2), pages 465-481, January.

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