Gorman revisited: nonparametric conditions for exact linear aggregation
Bram De Rock and
Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven
In the tradition of Afriat (1967), Diewert (1973) and Varian (1982), we provide a revealed preference characterisation of exact linear aggregation. This guarantees that aggregate demand can be written as a function of prices and aggregate income alone, while abstracting from income-distributional aspects. We also establish nonparametric conditions for individual consumption to be representable in terms of Gorman Polar Form preferences. Our results are simple and complement those of Gorman (1953, 1961). We illustrate the practical usefulness of our results by means of an empirical application to a Spanish balanced microdata panel.
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Working Paper: Gorman Revisited: Nonparametric Conditions for Exact Linear Aggregation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces13.05
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