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Estimation of the Brazilian Consumer Demand System

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  • Asano, Seki
  • Fiuza, Eduardo P. S.

Abstract

In this study we estimate the Brazilian consumer demand system through family expenditure data, which cover all consumption categories. The model is estimated from family-level expenditures on seven consumption categories, and a new set of regional cost-of-living indexes. The sources for expenditures are the national household expenditure surveys (POFs) conducted in 1987/88 and 1995/96, which collected data from eleven metropolitan areas. To the best of our knowledge this is the first study of this type and extent based on both waves of POF. Corresponding price indexes were constructed from detailed commodity prices, also from each metropolitan area. The salient features of our study are 1) price variations come from both time and regional differences, which allows us to estimate price elasticities with high precision, 2) we have large variations in income (total expenditures), which is rarely available in aggregate data, and 3) we control for time specific factors by exploiting the panel structure of the data set.

Suggested Citation

  • Asano, Seki & Fiuza, Eduardo P. S., 2003. "Estimation of the Brazilian Consumer Demand System," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 23(2), November.
    • Handle: RePEc:sbe:breart:v:23:y:2003:i:2:a:2726
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    1. Rossi, José W. & das Neves, César, 1987. "Elasticidade de Engel no Brasil usando um sistema de equações com especificações Logit," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 41(4), October.
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    3. Pashardes, Panos, 1993. "Bias in Estimating the Almost Ideal Demand System with the Stone Index Approximation," Economic Journal, Royal Economic Society, vol. 103(419), pages 908-915, July.
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    5. Thomas, D. & Strauss, J. & Barbosa, M.M.T.L., 1989. "Estimating The Impact Of Income And Price Changes On Consumption In Brazil," Papers 589, Yale - Economic Growth Center.
    6. Alston, Julian M & Foster, Kenneth A & Green, Richard D, 1994. "Estimating Elasticities with the Linear Approximate Almost Ideal Demand System: Some Monte Carlo Results," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 351-356, May.
    7. Giancarlo Moschini, 1995. "Units of Measurement and the Stone Index in Demand System Estimation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 63-68.
    8. Adolf Buse, 1998. "Testing Homogeneity in the Linearized Almost Ideal Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 208-220.
    9. Richard Green & Julian M. Alston, 1990. "Elasticities in AIDS Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 442-445.
    10. 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.
    11. Seki Asano, 1997. "Joint Allocation of Leisure and Consumption Commodities: A Japanese Extended Consumer Demand System 1979—90," The Japanese Economic Review, Japanese Economic Association, vol. 48(1), pages 65-80, January.
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    Cited by:

    1. Naércio Aquino Menezes Filho & Marc-Andreas Muendler, 2007. "Labor Reallocation in Response to Trade Reform," CESifo Working Paper Series 1936, CESifo.
    2. Tey, (John) Yeong-Sheng, 2008. "Household expenditure on food at home in Malaysia," MPRA Paper 15031, University Library of Munich, Germany.

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