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The Distribution of Consumption-Expenditure Budget Shares. Evidence from Italian Households

Author

Listed:
  • Matteo Barigozzi
  • Lucia Alessi
  • Marco Capasso
  • Giorgio Fagiolo

Abstract

This paper explores the statistical properties of household consumption-expenditure budget shares distributions (HBSDs) ---defined as the share of household total expenditure spent for purchasing a specific category of commodities--- for a large sample of Italian households in the period 1989-2004. We find that HBSDs are fairly stable over time for each specific category, but profoundly heterogeneous across commodity categories. We then derive a parametric density that is able to satisfactorily characterize HBSDs and: (i) is consistent with the observed statistical properties of the underlying levels of household consumption-expenditure distributions; (ii) can accommodate the observed across-category heterogeneity in HBSDs. Finally, we taxonomize commodity categories according to the estimated parameters of the proposed density. We show that the resulting classification is consistent with the traditional economic scheme that labels commodities as necessary, luxury or inferior.

Suggested Citation

  • Matteo Barigozzi & Lucia Alessi & Marco Capasso & Giorgio Fagiolo, 2008. "The Distribution of Consumption-Expenditure Budget Shares. Evidence from Italian Households," LEM Papers Series 2008/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  • Handle: RePEc:ssa:lemwps:2008/18
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Household Consumption Expenditure; Budget Shares; Sum of Log-Normal Distributions;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D3 - Microeconomics - - Distribution
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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