Testing for negativity in a demand system: A Bayesian approach

Hideo Kozumi (), Noriko Hashimoto () and Hikaru Hasegawa ()
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Hideo Kozumi: Faculty of Economics and Business Administration, Hokkaido University, Nishi 7, Kita 9, Kita-ku, Sapporo 060-0809, Japan
Noriko Hashimoto: Faculty of Economics, Kansai University, 3-3-35 Yamata, Suita, Osaka 564-8680, Japan
Hikaru Hasegawa: Faculty of Economics and Business Administration, Hokkaido University, Nishi 7, Kita 9, Kita-ku, Sapporo 060-0809, Japan

Empirical Economics, 1999, vol. 24, issue 2, 223 pages

Abstract: The paper introduces Bayesian inference into a demand model. This allows us to test for the negativity condition of the substitution matrix which is difficult to handle directly in the traditional approach. To illustrate the Bayesian inference procedures, we estimate the Rotterdam model and test the demand properties using Japanese data. The empirical results show the importance of specifically considering negativity in demand analysis.

Keywords: Markov; chain; Monte; Carlo; (MCMC); ·; conditional; predictive; ordinate; (CPO); ·; Bayes; factor; ·; Rotterdam; model (search for similar items in EconPapers)
JEL-codes: C11 D12 (search for similar items in EconPapers)
Date: 1999-05-11
Note: received: September 1997/final version received: February 1998
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Citations: View citations in EconPapers (3)

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