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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/53

Title: Estimation of unit values in cross sections without quantity information and implications for demand and welfare analysis
Authors: Atella, Vincenzo
Menon, Martina
Perali, Federico
Keywords: unit values
cross-section prices
demand analysis
Slutsky matrix properties
Issue Date: Mar-2003
Publisher: CEIS
Series/Report no.: CEIS Tor Vergata Research Paper; 12
Abstract: Household surveys frequently record only expenditure information. The lack of information about quantities purchased precludes the possibility of deriving household specific unit values. The aggregate price indexes derived from sources exogenous to the household survey are often not sufficient to identify all parameters and to provide plausible estimates. We use a theoretical result developed by Lewbel (1989) to construct "pseudo" unit values by 1) reproducing the variability of crosssectional price variation using the variability of the budget shares, and 2) adding the variability to the aggregate price indexes published by the national statistical institute. The study estimates a complete quadratic demand system using a time series of cross-sections of Italian household budgets including, in turn, aggregate price indexes and "pseudo" unit values. The results show that the matrix of compensated price elasticities is negative semidefinite only if "pseudo" unit values are used. In order...
URI: http://ssrn.com/abstract=391481
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