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Best Nonparametric Bounds on Demand Responses

Richard Blundell (), Martin Browning and Ian Crawford ()

No 2005-16, CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics

Abstract: This paper uses revealed preference inequalities to provide tight nonparametric bounds on consumer responses to price changes. Price responses are allowed to vary nonparametrically across the income distribution by exploiting micro data on consumer expenditures and incomes over a finite set of discrete relative price changes. This is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths (Engel curves). We label these expansion path based bounds as E-bounds. Deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterise taste change.

Keywords: demand responses; relative prices; revealed preference; semiparametric regression; changing tastes (search for similar items in EconPapers)
JEL-codes: C14 C43 D12 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-09
New Economics Papers: this item is included in nep-ecm
References: View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

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Journal Article: Best Nonparametric Bounds on Demand Responses (2008) Downloads
Working Paper: Best nonparametric bounds on demand responses (2005) Downloads
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