Stone-Geary Meets CES: An Extended Linear Expenditure System

Ferran Sancho

No 1328, Working Papers from Barcelona School of Economics

Abstract: We reformulate the Stone-Geary utility function to incorporate non-unitary elasticities of substitution. We show that this extended linear expenditure system includes the standard Stone-Geary case but eliminates some of its restrictions. In particular, and most significantly, the proportions of expenditure over leftover income become price responsive under the extended demand system.

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)
Date: 2022-03
New Economics Papers: this item is included in nep-upt
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Working Paper: Stone-Geary meets CES:An extended linear expenditure system (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1328

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