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Omitted variables, dynamic specification and tests for homogeneity

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  • David Madden

Abstract

This note examines the sensitivity of tests for homogeneity in demand systems to such factors as omitted variables and dynamic and stochastic specification. It estimates demand systems for Ireland using time-series data for different unconditional demand systems with differing dynamic and stochastic specification and also estimates a conditional demand system, thus attempting to reconcile disparate results from previous work in this area.

Suggested Citation

  • David Madden, 1995. "Omitted variables, dynamic specification and tests for homogeneity," Applied Economics Letters, Taylor & Francis Journals, vol. 2(10), pages 372-374.
  • Handle: RePEc:taf:apeclt:v:2:y:1995:i:10:p:372-374
    DOI: 10.1080/758518992
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    References listed on IDEAS

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    1. 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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    3. Hendry, David F & Mizon, Grayham E, 1978. "Serial Correlation as a Convenient Simplification, not a Nuisance: A Comment on a Study of the Demand for Money by the Bank of England," Economic Journal, Royal Economic Society, vol. 88(351), pages 549-563, September.
    4. Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
    5. Blundell, Richard, 1988. "Consumer Behaviour: Theory and Empirical Evidence--a Survey," Economic Journal, Royal Economic Society, vol. 98(389), pages 16-65, March.
    6. Stoker, Thomas M, 1986. "Simple Tests of Distributional Effects on Macroeconomic Equations," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 763-795, August.
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