Consumer demand in EU member states

Umed Temursho and Matthias Weitzel

No JRC136876, JRC Research Reports from Joint Research Centre

Abstract: By combining econometric estimations with the calibration of consumer expenditure data, this study estimates a linear expenditure system (LES) for the 27 EU countries. We use the EU Household Budget Survey (HBS) data for the reference years of 2010 and 2015, which provide data for about 275, 000 and 276,100 EU households, respectively. In addressing the challenge of insufcient price variability in cross-sectional data, we first construct household-specific pseudo unit values, which enable us to derive the estimates of countryspecific Frisch parameters by expenditure decile for all EU countries. The obtained variability of the Frisch parameters across countries and household income groups underscores the importance of properly accounting for and incorporating this heterogeneity in modelling exercises that are based on the parameter in question. Subsequent estimations of the LES model differentiate households by three urbanization degrees of household residence and ten income groups. To take full advantage of consumer microdata, the resulting income elasticities for 23 commodity groups are calibrated within a relative entropy optimization framework to obtain consistent estimates of household-specific income and price elasticities. Finally, the study illustrates the richness of this combined approach in accounting for heterogeneity and nonlinearities in household consumption behavior.

Date: 2024-04
New Economics Papers: this item is included in nep-eec and nep-eur
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publications.jrc.ec.europa.eu/repository/handle/JRC136876 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ipt:iptwpa:jrc136876

Access Statistics for this paper

More papers in JRC Research Reports from Joint Research Centre Contact information at EDIRC.
Bibliographic data for series maintained by Publication Officer ().