Demand System Estimation

Eliyathamby A. Selvanathan, Saroja Selvanathan, Maneka Jayasinghe

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    The demand elasticities are useful inputs for policy analysts and researchers, because an understanding of price and income responses is a very important element in the formulation of fiscal policy or any other type of economic program. One of the primary objectives of applied demand analysis is to estimate demand systems to analyse the responses to changes in income and prices on demand for consumer goods. The basic idea behind the Monte Carlo simulation procedure is to simulate a large number of values of the test statistic under the null hypothesis to construct its empirical distribution. The observed value of the test statistic is then compared with this distribution. Since preference independence among the nine commodity groups is widely acceptable for the 45 countries data, we report only the estimation results from the Rotterdam demand model under preference independence, given by equation, for all countries.
    Original languageEnglish
    Title of host publicationHousehold Demand for Consumer Goods in Developing Countries
    Subtitle of host publicationA Comparative Perspective with Developed Countries
    EditorsEliyathamby A. Selvanathan, Saroja Selvanathan, Maneka Jayasinghe
    Place of PublicationLondon
    PublisherRoutledge Taylor & Francis Group
    Number of pages32
    ISBN (Electronic)9780429200120
    Publication statusPublished - 2022


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