Demographic demand systems with application to equivalence scales estimation and inequality analysis: the Australian evidence

Paul Blacklow, Aaron Nicholas and Ranjan Ray

No 9289, Working Papers from University of Tasmania, Tasmanian School of Business and Economics

Abstract: This paper proposes and applies an alternative demographic procedure for extending a demand system to allow for the effect of household size and composition changes, along with price changes, on expenditure allocation. The demographic procedure is applied to two recent demand functional forms to obtain their estimable demographic extensions. The estimation on pooled time series of Australian Household Expenditure Surveys yields sensible and robust estimates of the equivalence scale, and of its variation with relative prices. Further evidence on the usefulness of this procedure is provided by using it to evaluate the nature and magnitude of the inequality bias of relative price changes in Australia over a period from the late 1980s to the early part of the new millennium.

Keywords: equivalence scales; rank three demand; modified almost ideal demand system; Engel curve (search for similar items in EconPapers)
JEL-codes: C13 D12 D31 D63 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2008-12-01, Revised 2008-12-01
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Citations: View citations in EconPapers (1)

Published by the University of Tasmania. Discussion Paper 2008-07

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Related works:
Journal Article: DEMOGRAPHIC DEMAND SYSTEMS WITH APPLICATION TO EQUIVALENCE SCALES ESTIMATION AND INEQUALITY ANALYSIS: THE AUSTRALIAN EVIDENCE (2010)
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