A Class of Demand Systems Satisfying Global Regularity and Having Complete Rank Flexibility

Keith McLaren and Ou Yang ()

No 6/14, Monash Econometrics and Business Statistics Working Papers from Monash University, Department of Econometrics and Business Statistics

Abstract: A class of demand systems based on simple parametric specification of the indirect utility functions, but allowing for the parsimonious imposition of global regularity, is proposed. Demand systems in this class are completely flexible in rank, i.e., can be potentially specified to acquire as large a rank as required in empirical work. They also exhibit a clear and reasonable homothetic asymptotic behaviour. In an empirical application using Australian data, several examples from this class are estimated and compared with some popular alternatives in the literature.

Keywords: Demand systems; Global regularity; Complete rank flexibility; Duality theory; Indirect utility function (search for similar items in EconPapers)
JEL-codes: D11 D12 (search for similar items in EconPapers)
Pages: 28
Date: 2014
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (2)

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