Imposing local curvature in the QUAIDS

Chang, Dongfeng; Serletis, Apostolos

doi:10.1016/j.econlet.2011.11.033

Cited by 3 publications

(3 citation statements)

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“…Also, Moschini (1999) suggests a possible reparametrization of the basic translog of Christensen et al (1975) to overcome some problems noted by Ryan and Wales (1998) and imposes curvature conditions locally in the basic translog. More recently, Serletis and Shahmoradi (2007) impose curvature conditions locally on the generalized Leontief model, introduced by Diewert (1974), and Chang and Serletis (2012) on the quadratic AIDS (QUAIDS) of Banks et al (1997), an extension of the simple AIDS model that can generate quadratic Engel curves. Also, Blundell et al (2012) develop a new method for estimating a demand function and apply it to gasoline demand in the USA, using data from the 2001 US National Household Travel Survey.…”

Section: Dollars Per Barrelmentioning

confidence: 99%

“…Solving for the γ ij terms as a function of the ( KK ′) ij terms we can get the restrictions that ensure the negative semidefiniteness of the Slutsky matrix, without destroying the flexibility of (10) as the number of free parameters remains the same. See Chang and Serletis () for an example with n = 3.…”

Section: Flexible Demand Systemsmentioning

confidence: 99%

“…() to overcome some problems noted by Ryan and Wales () and imposes curvature conditions locally in the basic translog. More recently, Serletis and Shahmoradi () impose curvature conditions locally on the generalized Leontief model, introduced by Diewert (), and Chang and Serletis () on the quadratic AIDS (QUAIDS) of Banks et al . (), an extension of the simple AIDS model that can generate quadratic Engel curves.…”

Section: Introductionmentioning

confidence: 99%

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The Demand for Gasoline: Evidence From Household Survey Data

Chang

Serletis

2013

J of Applied Econometrics

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SUMMARY In this paper we investigate the demand for gasoline in Canada using recent annual expenditure data from the Canadian Survey of Household Spending, over a 13‐year period from 1997 to 2009, on three expenditure categories in the transportation sector: gasoline, local transportation, and intercity transportation. In doing so, we use three of the most widely used locally flexible functional forms, the Almost Ideal Demand System (AIDS) of Deaton and Muellbauer (1980), the quadratic AIDS (QUAIDS) of Banks et al. (1997)—an extension of the simple AIDS model that can generate quadratic Engel curves—and the Minflex Laurent model of Barnett (1983), which can also generate quadratic Engel curves. We pay explicit attention to economic regularity, argue that unless regularity is attained by luck, flexible functional forms should always be estimated subject to regularity as suggested by Barnett (2002), and impose local curvature to produce inference consistent with neoclassical microeconomic theory. Our findings indicate that the curvature‐constrained Minflex Laurent model is the only model that is able to provide theoretically consistent estimates of the Canadian demand for gasoline. Our estimates show that the own‐price elasticity for gasoline demand in Canada is between − 0.738 and − 0.570 —less elastic than previously reported in the literature. Copyright © 2013 John Wiley & Sons, Ltd.

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