A Microeconomic Approach to Estimating Demand: The Asymptotically Ideal Model

A survey of life insurance efficiency papers: Methods, pros & cons, trends

“…One disadvantage of utilizing a FF functional form is that the sine and cosine functions of the FF form have no economic interpretation making it difficult to analyze any outcomes obtained. Moreover the sine and cosine functions do not satisfy the usual regularity conditions, such as increasing monotonically and being strictly quasi-concave (Yue, 1991), even though this drawback can be overcome by employing the procedure of Gallant & Golub (1982), forcing quasi-convexity of the consumer's individual utility function to easily make the FF functional form regular (Barnett et al, 1991). Furthermore, a FF form can overfit the random error contained in the data (Koop et al, 1994;Yue, 1991) as a large enough FF functional form will ultimately attain a perfect fit because noise will be looked at as irrational behavior (Barnett et al, 1991).…”

“…Moreover the sine and cosine functions do not satisfy the usual regularity conditions, such as increasing monotonically and being strictly quasi-concave (Yue, 1991), even though this drawback can be overcome by employing the procedure of Gallant & Golub (1982), forcing quasi-convexity of the consumer's individual utility function to easily make the FF functional form regular (Barnett et al, 1991). Furthermore, a FF form can overfit the random error contained in the data (Koop et al, 1994;Yue, 1991) as a large enough FF functional form will ultimately attain a perfect fit because noise will be looked at as irrational behavior (Barnett et al, 1991). Also because n-order trigonometric terms 3 are included there is an increased chance of multicollinearity among the function's terms which hinders an assessment of the meaning of the coefficient estimates (Ward, 2002).…”

A Semi-Nonparametric Approach to the Demand for Money in Pakistan

“…Havenner and Saha (1999) estimate a number of AIM forms with multiple datasets, and list the following major advantages of using AIM specifications: (i) they are able to approximate functions over the entire range of a sample, (ii) they are globally flexible and capable of imposing regularity conditions globally rather than just locally, and (iii) there is no problem of over-fitting. Yue (1999) uses an AIM to estimate a demand for money function for the US economy. The model guarantees asymptotic convergence to an underlying neoclassical utility function.…”

Which Road Leads to Stable Money Demand?

“…The seminal study incorporating risk is Poterba and Rotemberg (1987), who emphasise the estimation of the deep parameters of Euler equations to avoid Lucas critique problems. Other examples include Belongia (1996a), Barnett and Hahm (1994), Barnett et al (1991, 1994), Donovan (1978), Fisher and Fleissig (1994), Serletis (1991), Swofford and Whitney (1987), and Yue (1991) 17 . For a survey of other related work, see Barnett et al (1992).…”