The effects of the new 1995 ESA methodologies of estimation on the structural analysis of Italian consumption

Abstract

This study deals with the importance of the correct definition and identification of the consumption variable to obtain a good description of consumer behaviour, and shows how the new definitions of consumption introduced by the 1995 European System of Accounts (ESA) provide a better descriptive capability of the classic multiequational models of consumption compared with the definition and concept of the 1979 ESA. The models used are the Rotterdam Model, the Linear Expenditure System, and the Almost Ideal Demand System. Cointegration techniques have been applied to estimate Almost Ideal Demand System parameters. Data on Italian final consumption expenditure of households have been used.