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Fractional Multinomial Response Models With An Application To Expenditure Shares

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  • Steven F. Koch

    () (Department of Economics, University of Pretoria)

Abstract

The research presented here considers the performance of the Fractional Multinomial Logit (FMNL) model in explaining expenditure shares using data from the 2005/06 South African Income and Expenditure Survey. The results suggest that the FMNL performs favourably, when the dataset is large enough, but that it does not perform as well, when the dataset is limited. Expenditure elasticities were also estimated, and compared to the expenditure shares from a QUAIDS model. The resulting expenditure shares are fairly similar across model specification; however, the FMNL model does incorporate additional curvature, which is easily observed when comparing the QUAIDS elasticities to the FMNL elasticities.

Suggested Citation

  • Steven F. Koch, 2010. "Fractional Multinomial Response Models With An Application To Expenditure Shares," Working Papers 201021, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:201021
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    Citations

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    Cited by:

    1. Adel Bosch and Steven F. Koch, 2014. "Using a Natural Experiment to Examine Tobacco Tax Regressivity," Working Papers 434, Economic Research Southern Africa.
    2. Becker, Gideon, 2014. "The portfolio structure of German households: A multinomial fractional response approach with unobserved heterogeneity," University of Tuebingen Working Papers in Economics and Finance 74, University of Tuebingen, Faculty of Economics and Social Sciences.
    3. Cho, Sung Ju & McCarl, Bruce A. & Wu, Ximing, 2014. "Climate Change Adaptation and Shifts in Land Use for Major Crops in the U.S," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170015, Agricultural and Applied Economics Association.
    4. Allen, James E. IV, 2014. "Determinants of Land Allocation in a Multi-Crop Farming System: An Application of the Fractional Multinomial Logit Model to Agricultural Households in Mali," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170175, Agricultural and Applied Economics Association.
    5. John Mullahy, 2010. "Multivariate Fractional Regression Estimation of Econometric Share Models," NBER Working Papers 16354, National Bureau of Economic Research, Inc.
    6. Mark Musumba & Mjelde & Adusumilli, 2015. "Remittance receipts and allocation: a study of three African countries," Applied Economics, Taylor & Francis Journals, vol. 47(59), pages 6375-6389, December.

    More about this item

    Keywords

    Expenditure Shares; Multinomial Fractional Logit.;

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