Best nonparametric bounds on demand responses

Richard Blundell (), Martin Browning and Ian Crawford ()

No W05/20, IFS Working Papers from Institute for Fiscal Studies

Abstract: This paper uses revealed preference inequalities to provide tight nonparametric bounds on consumer responses to price changes. Price responses are allowed to vary nonparametrically across the income distribution by exploiting microdata on consumer expenditures and incomes over a finite set of discrete relative price changes. This is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths (Engel curves). We label these expansion path based bounds as E-bounds. Deviations from revealed preference restrictions aremeasured by preference perturbations which are shown to usefully characterise taste change.

Keywords: Demand responses; relative prices; revealed preference; semiparametric regression; changing tastes (search for similar items in EconPapers)
JEL-codes: D12 C14 C43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm
Date: 2005-10
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Related works:
Working Paper: Best nonparametric bounds on demand responses (2005)
Working Paper: Best Nonparametric Bounds on Demand Responses (2005)
Journal Article: Best Nonparametric Bounds on Demand Responses (2008)
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