Engel Curves Leading to the Weak Axiom in the Aggregate

Xavier Freixas () and Andreu Mas-Colell

Econometrica, 1987, vol. 55, issue 3, 515-31

Abstract: For every range of admissible incomes, the authors characterize the class of Engel curves with the property that if an economy has, first, a price independent distribution of income and, second, preferences which are identical across consumers and generate Engel curves in the class, then the corresponding aggregate demand function satisfies the Weak Axiom of Revealed Preference. This class is defined by two simple conditions. The no-torsion condition says that, in the relevant range of income, the Engel curve is contained in a plane through the origin. The uniform-curvature condition says that, in addition, the Engel curve is either convex or concave to the origin. Copyright 1987 by The Econometric Society.

Date: 1987
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