ISSN:
1435-8921
Keywords:
IAIDS
;
Habit Formation
;
Distance Function
;
Long Memory
;
Meat Demand
;
Misspecification Tests
;
C51
;
C52
;
D12
;
Q11
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract The Inverse Almost Ideal Demand System (IAIDS) model of Moschini and Vissa (1992) and Eales and Unnevehr (1994) is extended to include: (1) general, nonlinear, nonadditive habit effects; and (2) a specification for habit stock terms that allows purchases from the distant past to influence current consumption (long memory). The resulting models are compared with a linear habit effects model and a static specification. The empirical estimation is on U.S. quarterly meat expenditures (1961–1993), with each model being subjected to a battery of misspecification tests. Results of these tests, along with tests of homogeneity and symmetry restrictions, indicate clearly that the most generalized dynamic specification-the one with nonlinear, nonadditive long-memory habit stock effects-is preferred. Furthermore, persistence effects are found to be qualitatively important in that flexibility, consumption scale, and habit flexibility estimates differ, in some instances substantially, between alternative specifications.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01205360
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