Demand Systems II: Further Results and Details

Kenneth W. Clements (), Haiyan Liu, Marc Jim M. Mariano (), Eliyathamby A. Selvanathan (), Saroja Selvanathan () and George Verikios ()
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Kenneth W. Clements: University of Western Australia
Haiyan Liu: University of Western Australia
Marc Jim M. Mariano: Commonwealth Scientific and Industrial Research Organisation
Eliyathamby A. Selvanathan: Griffith University
Saroja Selvanathan: Griffith University
George Verikios: Griffith University

Chapter Chapter 7 in Short-cut Demand Elasticities and Other Convenient Approaches to Consumer Demand, 2025, pp 127-145 from Springer

Abstract: Abstract According to microeconomic theory, a system of demand equations should satisfy homogeneity (the absence of money illusion) and Slutsky symmetry (the substitution effects of price changes are symmetric). This chapter deals with the econometric testing of these implications. Relatedly, as microeconomic theory refers to the individual consumer, how can this be applied to aggregated data such as that contained in the national accounts? The convergence approach to aggregation provides an elegant solution to this problem, details of which are in this chapter. Finally, the stability or otherwise of tastes internationally is discussed.

Date: 2025
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DOI: 10.1007/978-981-96-3588-7_7

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