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Estimation of a complete system of nonlinear Engel curves: further evidence from Box-Cox Engel curves for Sri Lanka

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  • S. Rajapakse

Abstract

The specification and estimation of Engle curves has drawn much attention over many years since the earliest attempt of Working (1943). Among the many approaches, a complete system of Engel curves stood out as more appealing as it explicitly imposes the important budget constraint in the allocation of family budgets. Further, extended researches were undertaken on nonlinear specifications as they are likely to produce results that are closer to the reality than the linear systems. Beneito (2003) attempted Box-Cox form of nonlinear specification but ended up estimating a set of linear equations using seemingly unrelated regression equations method. The present research extends the previous work on Engle curves in two ways; first by incorporating key demographic characteristics into the determination of expenditures in the specification of the Box-Cox form of nonlinear system, and second by using primary micro data from large household surveys to estimate the system by nonlinear estimation methods. Our estimations have produced robust results; the expenditure patterns are significantly nonlinear and the expenditure patterns are significantly different for different demographic groups.

Suggested Citation

  • S. Rajapakse, 2011. "Estimation of a complete system of nonlinear Engel curves: further evidence from Box-Cox Engel curves for Sri Lanka," Applied Economics, Taylor & Francis Journals, vol. 43(3), pages 371-385.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:3:p:371-385
    DOI: 10.1080/00036840802552346
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    Cited by:

    1. Tomas Lichard & Jan Hanousek & Randall K. Filer, 2012. "Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation," Economics Working Paper Archive at Hunter College 438, Hunter College Department of Economics.
    2. Selvanathan, Saroja & Selvanathan, E.A. & Jayasinghe, Maneka, 2021. "A new approach to analyse conditional demand: An application to Australian energy consumption," Energy Economics, Elsevier, vol. 93(C).
    3. Sumudu Perera & Mahinda Siriwardana & Stuart Mounter, 2014. "Should agriculture be exempt from trade policy reforms in South Asia?," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(1), pages 67-106, June.

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