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Generalized habit formation in an Inverse Almost Ideal Demand System: An application to meat expenditures in the U.S.
| Content Provider | Semantic Scholar |
|---|---|
| Author | Holt, Matthew T. Goodwin, Barry K. |
| Copyright Year | 1997 |
| Abstract | The Inverse Almost Ideal Demand System (IAIDS) model of Moschini and Vissa (1992) and Eales and Unnevehr (1994) is extended to include: (1) general, nonlinear, nonadditive habit effects; and (2) a specification for habit stock terms that allows purchases from the distant past to influence current consumption (long memory). The resulting models are compared with a linear habit effects model and a static specification. The empirical estimation is on U.S. quarterly meat expenditures (1961–1993), with each model being subjected to a battery of misspecification tests. Results of these tests, along with tests of homogeneity and symmetry restrictions, indicate clearly that the most generalized dynamic specification-the one with nonlinear, nonadditive long-memory habit stock effects-is preferred. Furthermore, persistence effects are found to be qualitatively important in that flexibility, consumption scale, and habit flexibility estimates differ, in some instances substantially, between alternative specifications. |
| Starting Page | 293 |
| Ending Page | 320 |
| Page Count | 28 |
| File Format | PDF HTM / HTML |
| DOI | 10.1007/BF01205360 |
| Alternate Webpage(s) | https://page-one.springer.com/pdf/preview/10.1007/BF01205360 |
| Alternate Webpage(s) | https://doi.org/10.1007/BF01205360 |
| Volume Number | 22 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
