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Effects of Price Shocks on Consumer Demand: Estimating the QUAIDS Demand System on Czech Household Budget Survey Data

Kamil Dybczak, Peter Tóth () and David Voòka ()
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David Voòka: Semanta s.r.o., Prague

Authors registered in the RePEc Author Service: David Vonka ()

Czech Journal of Economics and Finance (Finance a uver), 2014, vol. 64, issue 6, 476-500

Abstract: The purpose of this paper is to provide estimates of price and income elasticities of Czech consumer demand, which can be used when analyzing the impact of exogenous price changes on consumer behavior. We estimate a demand system in which demand depends on income, prices and other socio-economic household characteristics. We combine the Household Budget Survey data with information on prices from alternative sources between 2000 and 2008. Based on our estimates, the commodity bundles of food, energy, and health and body care are necessary goods, as their budget elasticity is positive and below one. Clothing, transportation, education and leisure are luxury goods, with income elasticity above one. We found expenditure on energy and transportation and communication to be the most elastic in their own prices. We use our estimates to analyze the impact of regulated price changes on consumer demand and discuss the further potential use of our results.

Keywords: consumer behavior; demand systems; price and income elasticities; regulated prices (search for similar items in EconPapers)
JEL-codes: D12 E21 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Effects of Price Shocks to Consumer Demand. Estimating the QUAIDS Demand System on Czech Household Budget Survey Data (2010) Downloads
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Handle: RePEc:fau:fauart:v:64:y:2014:i:6:p:476-500