The Rank of a System of Engel Curves. How Many Common Factors?

Matteo Barigozzi and Alessio Moneta ()

Papers on Economics and Evolution from Philipps University Marburg, Department of Geography

Abstract: By representing a system of budget shares as an approximate factor model we determine its rank, i.e. the number of common functional forms, or factors, spanning the space of Engel curves. Once the common factors are estimated via approximate principal components, we identify them by imposing statistical independence. Finally, by means of parametric and non-parametric regressions we estimate the factors as functions of total expenditure. Using data from the U.K. Consumption Expenditure Survey from 1968 to 2006, we find evidence of three common functional forms which correspond to decreasing, increasing and almost constant Engel curves. The household consumption behavior is therefore driven by three factors respectively related to necessities (e.g. food), luxuries (e.g. vehicles), and goods to which is allocated the same percentage of total budget both in rich and in poor households (e.g. housing).

Keywords: Engel Curves; Demand Systems; Factor Models; Independent Component Analysis Length 29 pages (search for similar items in EconPapers)
JEL-codes: C52 D12 (search for similar items in EconPapers)
Date: 2011-01-27
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
ftp://137.248.191.199/RePEc/esi/discussionpapers/2011-01.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Failed to connect to FTP server 137.248.191.199: A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:esi:evopap:2011-01

Access Statistics for this paper

More papers in Papers on Economics and Evolution from Philipps University Marburg, Department of Geography Deutschhausstrasse 10, 35032 Marburg. Contact information at EDIRC.
Bibliographic data for series maintained by Christoph Mengs ( this e-mail address is bad, please contact ).