Votes or Money? Theory and Evidence from the US Congress

Thanasis Stengos (), Panayiota Lyssiotou () and Panos Pashardes ()
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Panayiota Lyssiotou: University of Cyprus, Cyprus

Working Paper Series from Rimini Centre for Economic Analysis

Abstract: We consider the effects of demographic and expenditure variables on consumer demand in a system of Engel curves using a smooth coefficient semiparametric model where the expenditure effects on the budget shares vary nonparametrically with demographic variables such as the age of head and number of children in the household. Our findings, based on UK micro data, suggest that with a smooth coefficient semiparametric model there is no need for nonlinear logarithmic expenditure effects in the budget shares. Furthermore, we find evidence of a trade-off between demographic and expenditure effects in Engel curves and that a rank-2 system of Engel curves where the logarithmic expenditure effects are allowed to vary with demographic characteristics either nonparametrically or as a third degree polynomial function cannot be rejected against a rank-3 (quadratic logarithmic) model. The implications on household behaviour and welfare are also examined.

Keywords: Preference Heterogeneity; Rank Test; Demand Systems (search for similar items in EconPapers)
JEL-codes: D1 (search for similar items in EconPapers)
Date: 2007-07, Revised 2007-07

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Persistent link: http://EconPapers.repec.org/RePEc:rim:rimwps:22-07

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