Demographic vs Expenditure Flexibility in Engel Curves

Panayiota Lyssiotou (), Panos Pashardes and Thanasis Stengos
Additional contact information
Panayiota Lyssiotou: University of Cyprus, Cyprus

Working Paper series from Rimini Centre for Economic Analysis

Abstract: We consider the effects of demographic and expenditure variables on consumer demand in a system of Engel curves using a smooth coefficient semiparametric model where the expenditure effects on the budget shares vary nonparametrically with demographic variables such as the age of head and number of children in the household. Our findings, based on UK micro data, suggest that with a smooth coefficient semiparametric model there is no need for nonlinear logarithmic expenditure effects in the budget shares. Furthermore, we find evidence of a trade-off between demographic and expenditure effects in Engel curves and that a rank-2 system of Engel curves where the logarithmic expenditure effects are allowed to vary with demographic characteristics either nonparametrically or as a third degree polynomial function cannot be rejected against a rank-3 (quadratic logarithmic) model. The implications on household behaviour and welfare are also examined.

Keywords: Preference Heterogeneity; Rank Test; Demand Systems (search for similar items in EconPapers)
JEL-codes: D1 (search for similar items in EconPapers)
Date: 2007-07
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.rcea.org/RePEc/pdf/wp22_07.pdf

Related works:
Working Paper: Demographic vs. Expenditure Flexibility in Engel Curves (2002)
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:rim:rimwps:22_07

Access Statistics for this paper

More papers in Working Paper series from Rimini Centre for Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Marco Savioli ().