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Quadratic Engel Curves with Measurement Error: Evidence from a Budget Survey

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  • Abbi Kedir
  • Sourafel Girma

Abstract

This paper examines the importance of accounting for measurement error in total expenditure in the estimation of Engel curves, based on the 1994 Ethiopian Urban Household Survey. Using Lewbel's [Review of Economics and Statistics (1996), Vol. 78, pp. 718–725] estimator for demand models with correlated measurement errors in the dependent and independent variables, we find robust evidence of a quadratic relationship between food share and total expenditure in the capital city, and significant biases in various estimators that do not correct for correlated measurement errors.

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  • Abbi Kedir & Sourafel Girma, 2007. "Quadratic Engel Curves with Measurement Error: Evidence from a Budget Survey," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 123-138, February.
    • Handle: RePEc:bla:obuest:v:69:y:2007:i:1:p:123-138
    DOI: 10.1111/j.1468-0084.2007.00470.x
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    1. Sourafel Girma & Abbi M. Kedir, 2003. "Quadratic Food Engel Curves with Measurement Error: Evidence from a Budget Survey," Discussion Papers in Economics 03/17, Division of Economics, School of Business, University of Leicester.
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    1. Orazio Attanasio & Erich Battistin & Alice Mesnard, 2012. "Food and Cash Transfers: Evidence from Colombia," Economic Journal, Royal Economic Society, vol. 122(559), pages 92-124, March.
    2. Böhme, Marcus & Thiele, Rainer, 2012. "Is the Informal Sector Constrained from the Demand Side? Evidence for Six West African Capitals," World Development, Elsevier, vol. 40(7), pages 1369-1381.
    3. Fahd Rehman & Russel J. Cooper, 2023. "Effective GDP: A Cross‐Country Comparison," The World Economy, Wiley Blackwell, vol. 46(3), pages 619-652, March.
    4. Diagne, Youssoupha S & Diop, Mouhamadou M, 2007. "Quelles solutions à la hausse continue de la facture publique pétrolière : maintien des appuis à la consommation ou libre fixation des prix par le marché ? [Impact of energy subsidies withdrawal on," MPRA Paper 54807, University Library of Munich, Germany.
    5. Rijkers, Bob & Soderbom, Mans & Loening, Josef, 2009. "Mind the gap ? a rural-urban comparison of manufacturing firms," Policy Research Working Paper Series 4946, The World Bank.
    6. Ubfal, Diego, 2016. "How general are time preferences? Eliciting good-specific discount rates," Journal of Development Economics, Elsevier, vol. 118(C), pages 150-170.
    7. Francesco Burchi & Margherita Scarlato & Giorgio d'Agostino, 2018. "Addressing Food Insecurity in Sub‐Saharan Africa: The Role of Cash Transfers," Poverty & Public Policy, John Wiley & Sons, vol. 10(4), pages 564-589, December.
    8. Aimable Nsabimana & Ranjula Bali Swain & Yves Surry & Jean Chrysostome Ngabitsinze, 2020. "Income and food Engel curves in Rwanda: a household microdata analysis," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 8(1), pages 1-20, December.
    9. Sugata Marjit & Punarjit Roychowdhury, 2015. "Inequality and Trade: A Behavioral-Economics Perspective," Discussion Papers 2015-08, University of Nottingham, GEP.
    10. Nsabimana, Aimable & Rukundo, Bosco Johnson & Mukamugema, Alice & Ngabitsinze, Jean Chrysostome, 2022. "Residential energy demands in Rwanda: Evidence from Robust models," Energy Policy, Elsevier, vol. 160(C).
    11. Basu, Deepankar & Das, Debarshi, 2015. "Service Sector Growth in India: A View from Households," UMASS Amherst Economics Working Papers 2015-10, University of Massachusetts Amherst, Department of Economics.

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