2011-04-01
Global restrictions on the parameters of the CDES indirect utility function
Publication
Publication
Journal of Economics/ Zeitschrift fur Nationalokonomie , Volume 102 - Issue 3 p. 217- 235
This paper extends the analytical and empirical application of the basic indirect utility function of Houthakker-Hanoch-called the CDES specification (constant differences of elasticities of substitution). The non-homothetic CDES preferences are the natural parametric extension on the global domain of the homothetic CES preferences with many commodities, and CDES can conveniently be used in specifying CGE multisector models with a demand side satisfying observable Engel curve patterns. Moreover, all Marshallian own-price elasticities are no longer restricted to exceed one, and positive and negative cross-price effects are allowed for in empirical demand analyses. Explicit calculations of the Allen elasticities of substitution are instrumental in demonstrating the economic implications of the parameters of indirect utility functions with global regularity properties and flexibility of the derived demand systems.
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doi.org/10.1007/s00712-010-0180-x, hdl.handle.net/1765/37669 | |
Econometric Institute Reprint Series | |
Journal of Economics/ Zeitschrift fur Nationalokonomie | |
Organisation | Erasmus School of Economics |
Jensen, B. S., de Boer, P., & van Daal, J. (2011). Global restrictions on the parameters of the CDES indirect utility function. Journal of Economics/ Zeitschrift fur Nationalokonomie, 102(3), 217–235. doi:10.1007/s00712-010-0180-x |