Abstract
AbstractRecent literature on the estimation of models of consumer expenditure patterns indicates that Engel curves are nonlinear and demographic variables are important determinants of demand. A linear logit household expenditures model is presented which automatically displays “adding up” properties derived from the budget constraint while permitting great flexibility in the Engel curves. In addition, homogeneity and symmetry can be imposed and tested, and by a simple transformation the coefficients can be estimated by linear regression. Another advantage of the model is that demographic variables, such as household size and composition, can be introduced without sacrificing the “adding up” properties.
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