Stone-Geary meets CES:An extended linear expenditure system

Ferran Sancho

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We reformulate the Stone-Geary utility function to incorporate non-unitary elasticities of substitution. We show that this extended linear expenditure system eliminates some of the restrictions implied by the Stone-Geary function. In particular, and most significantly, the proportions of expenditure over supernumerary income become price responsive under the extended demand system and their price derivatives behave coherently with the degree of substitution.

Keywords: Linear expenditure system; Constant elasticity of substitution; Calibrated demand functions. (search for similar items in EconPapers)
JEL-codes: C55 D11 D12 (search for similar items in EconPapers)
Pages: 9
Date: 2023-06-21
New Economics Papers: this item is included in nep-upt
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Related works:
Working Paper: Stone-Geary Meets CES: An Extended Linear Expenditure System (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:971.23

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