Estimation of a Demand System: An Analysis Based on the 1988 Household Budget Survey
Keywords:
demand system, corner solutions, household budget survey, consumer behaviour, ChileAbstract
The Household Budget Survey of 1988 is used in this article to estimate econometrically a demand system for a group of goods allowing for corner solutions within the consumer maximization process. We faced the problem of estimating these systems using household data that reported zero expenditure in one of the various categories of goods. Several ways of dealing with this problem were analyzed, obtaining a stochastic form for the utility function that accommodated corner solutions and that did not require solving multiple integrals for its computational application. This result is crucial since the analytical framework developed fits numerous categories of goods. The speed of the estimation process to converge to an optimum in the estimation of the parameters of the structural model supports the advantages of the analytical framework utilized.Downloads
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Copyright (c) 1996 Cristián Aedo
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
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