Abstract
An indirect translog utility function is estimated for U.S. expenditure on domestically produced non-durables, durables, services and consumer imports. Empirical tests lead to the rejection of homogeneity and linear logarithmic utility as valid functional forms. Estimates of expenditure elasticities indicate that imported varieties of consumer goods are luxuries. An exogenous decrease in the price of these goods, which would occur when tariff barriers are relaxed, would be especially beneficial to upper income consumers. Finally, a redistribution of expenditure from upper income consumers to lower income consumers will increase expenditure on domestically produced goods and reduce expenditure on consumer imports.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.