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On the Functional Form of Engel Curves: The Australian Household Expenditure Survey 1975–76

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  • R. A. BEWLEY

Abstract

This paper considers the properties of a class of models which is based on the Addilog demand system. These models not only fulfil the adding‐up criterion but also ensure that the predicted expenditures are non‐negative and a subset of these models permits the existence of saturation levels for certain commodities. A goodness of fit comparison between this class and other systems of Engel curves favours the Addilog model. The estimated expenditure elasticities compare favourably with previous estimates of Australian household expenditure patterns and it is observed that the elasticities for health and alcohol and tobacco expenditures have decreased substantially from their levels in the late 1960s.

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  • R. A. Bewley, 1982. "On the Functional Form of Engel Curves: The Australian Household Expenditure Survey 1975–76," The Economic Record, The Economic Society of Australia, vol. 58(1), pages 82-91, March.
    • Handle: RePEc:bla:ecorec:v:58:y:1982:i:1:p:82-91
    DOI: 10.1111/j.1475-4932.1982.tb00351.x
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    1. repec:bla:ecorec:v:57:y:1981:i:156:p:80-85 is not listed on IDEAS
    2. Somermeyer, W. H. & Langhout, A., 1972. "Shapes of Engel curves and demand curves: Implications of the expenditure allocation model, applied to Dutch data," European Economic Review, Elsevier, vol. 3(3), pages 351-386, November.
    3. Kakwani, Nanak, 1977. "On the estimation of Engel elasticities from grouped observations with application to Indonesian data," Journal of Econometrics, Elsevier, vol. 6(1), pages 1-19, July.
    4. George E. Battese & Bruce P. Bonyhady, 1981. "Estimation of Household Expenditure Functions:An Application of a Class of Heteroscedastic Regression Models," The Economic Record, The Economic Society of Australia, vol. 57(1), pages 80-85, March.
    5. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Soregaroli, Claudio & Huff, Karen & Meilke, Karl D., 2002. "Demand System Choice Based On Testing The Engel Curve Specification," Working Papers 34139, University of Guelph, Department of Food, Agricultural and Resource Economics.
    2. David Giles & Andrea Keil, 1997. "Applying the RESET test in allocation models: a cautionary note," Applied Economics Letters, Taylor & Francis Journals, vol. 4(6), pages 359-363.
    3. Feltenstein, Andrew & Lebow, David & Sibert, Anne, 1988. "An analysis of the welfare implications of alternative exchange rate regimes: An intertemporal model with an application," Journal of Policy Modeling, Elsevier, vol. 10(4), pages 611-629.
    4. Nadeem A. Burney & Ashfaque H. Khan, 1991. "Household Consumption Patterns in Pakistan: An Urban-Rural Comparison Using Micro Data," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 30(2), pages 145-171.
    5. David E. A. Giles & Peter Hampton, 1985. "An Engel Curve Analysis of Household Expenditure in New Zealand," The Economic Record, The Economic Society of Australia, vol. 61(1), pages 450-462, March.
    6. Binh Tran‐Nam & Nripesh Podder, 1992. "On the Estimation of Total Expenditure Elasticities from Derived Engel Functions with Applications to Australian Micro‐Data," The Economic Record, The Economic Society of Australia, vol. 68(2), pages 142-150, June.
    7. Chung, Rebecca H. & Lee, Jonq-Ying & Brown, Mark G., 2002. "An Engel Curve Analysis of Household Expenditure in Taiwan: 1996-98," Research papers 53388, Florida Department of Citrus.
    8. P. Goldschmidt, 1990. "Economic Aspects of Alcohol Consumption in Australia: Part 2," Economics Discussion / Working Papers 90-17, The University of Western Australia, Department of Economics.
    9. Fry, Jane M. & Fry, Tim R. L. & McLaren, Keith R., 1996. "The stochastic specification of demand share equations: Restricting budget shares to the unit simplex," Journal of Econometrics, Elsevier, vol. 73(2), pages 377-385, August.
    10. Diotallevi, Francesco & Stasi, Antonio, 2010. "La domanda di olio extra-vergine di oliva nel Sud Italia.Quali le migliori strategie:brand leadership, private label o piccoli produttori? [The extra-virgin olive oil demand in South Italia.Whic ar," MPRA Paper 40480, University Library of Munich, Germany.
    11. Guang Wan, 1996. "Using panel data to estimate Engel functions: food consumption in China," Applied Economics Letters, Taylor & Francis Journals, vol. 3(9), pages 621-624.
    12. BuShehri, Mahmoud A.M. & Wohlgenant, Michael K., 2012. "Measuring the welfare effects of reducing a subsidy on a commodity using micro-models: An application to Kuwait's residential demand for electricity," Energy Economics, Elsevier, vol. 34(2), pages 419-425.

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