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Household Demand in Turkey: An Application of Almost Ideal Demand System with Spatial Cost Index

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  • Savas Alpay

    (Statistical Economic and Social Research and Training Centre for Islamic Countries (SESRTCIC))

  • Ali Koc

Abstract

A common difficulty in estimating demand functions for developing countries is the lack of time series data. With the available cross-sectional data resulting from extensive surveys on households, most researchers concentrated on the estimation of expenditure elasticities and ignored the price elasticities. Obviously, the results of this kind of partial analysis may not be very reliable for policy design. In this paper, a practical solution is provided by observing that regularly collected data on the cost of grouped commodity bundles across regions can reflect the spatial variation in prices and thus can be used as a proxy for the prices. As compared to previous studies estimating only the expenditure elasticities for Turkey, our results are different, in some cases with large margins. Thus, as expected, incorporation of prices into the demand analysis is vital not only in obtaining the price elasticities, but also in getting reliable estimates of the expenditure elasticities.

Suggested Citation

  • Savas Alpay & Ali Koc, 2002. "Household Demand in Turkey: An Application of Almost Ideal Demand System with Spatial Cost Index," Working Papers 0226, Economic Research Forum, revised 12 Sep 2002.
    • Handle: RePEc:erg:wpaper:0226
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    References listed on IDEAS

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    2. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
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    6. Kenneth W. Clements & Antony Selvanathan & Saroja Selvanathan, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
    7. Polinsky, A Mitchell, 1977. "The Demand for Housing: A Study in Specification and Grouping," Econometrica, Econometric Society, vol. 45(2), pages 447-461, March.
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    Cited by:

    1. Fade-Aluko, Titilope O. & Sanusi, Rahman A. & Afolami, Carolyn A. & Phillip, Biola B., 2016. "Analysis of Urban Households' Demand for Sweeteners in Ogun State, Nigeria," Nigerian Journal of Agricultural Economics, Nigerian Journal of Agricultural Economics, vol. 6(1), October.
    2. Javad Mir-Mohammad Sadeghi & Seyed Komail Tayebi & Mohammad Jamshidi, 2007. "Price and Expenditure Elasticities of Demand for Domestic Tourism in Iran: The Case of Hamedan Province," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 12(1), pages 85-102, winter.
    3. Javad Mir-Mohammad Sadeghi & Seyed Komail Tayebi & Mohammad Jamshidi, 2007. "Price and Expenditure Elasticities of Demand for Domestic Tourism in Iran: The Case of Hamedan Province," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 12(1), pages 1-18, winter.
    4. Shibia, Mumina & Rahman, Shaikh & Chidmi, Benaissa, 2017. "Consumer Demand For Meat In Kenya: An Examination Of The Linear Approximate Almost Ideal Demand System," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252789, Southern Agricultural Economics Association.

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