MONEY ILLUSION, GORMAN AND LAU

Scott Colby, Tim Graciano, Jeffrey LaFrance () and Rulon Pope

No 30-11, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: Any demand equation satisfying Lau’s (1982) Fundamental Theorem of Exact Aggregation and 0° homogeneity in prices and income will have a Gorman (1981) functional form for each income term. This property does not depend on symmetry or adding up. The implications of this result are illustrated by an extensive example.

Keywords: Demand; exact aggregation; functional form; homogeneity (search for similar items in EconPapers)
JEL-codes: C1 C5 D1 D3 D6 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2011-12
New Economics Papers: this item is included in nep-cba
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Related works:
Working Paper: Money illusion, Gorman and Lau (2011)
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