Journal
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
Volume 86, Issue 4, Pages 1108-1116Publisher
BLACKWELL PUBLISHERS
DOI: 10.1111/j.0002-9092.2004.00656.x
Keywords
almost ideal demand system; elasticity; group expenditure
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Group expenditure has often been treated as exogenous when estimating demand parameters for a group of commodities with an almost ideal demand system. Researchers draw demand elasticities from past literature to use in their own analysis, but elasticities contingent on exogenous group expenditure may be inappropriate. Here, the approach is considered in the case of Japanese meat demand with a simple equation added to estimate group expenditures. The results show that elasticities should be revised and that a group expenditure equation is not a panacea as it may result in the violation of theoretical restrictions, such as symmetry.
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