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Title:Best nonparametric bounds on demand responses PDF Logo
Authors:Blundell, Richard
Browning, Martin
Crawford, Ian
Issue Date:2005
Series/Report no.:IFS working papers 05,20
Abstract:This paper uses revealed preference inequalities to provide tight nonparametric bounds on consumer responses to price changes. Price responses are allowed to vary nonparametrically across the income distribution by exploiting microdata on consumer expenditures and incomes over a finite set of discrete relative price changes. This is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths (Engel curves). We label these expansion path based bounds as E-bounds. Deviations from revealed preference restrictions aremeasured by preference perturbations which are shown to usefully characterise taste change.
Subjects:Demand responses
relative prices
revealed preference
semiparametric regression
changing tastes
JEL:D12
C14
C43
Persistent Identifier of the first edition:doi:10.1920/wp.ifs.2005.0520
Document Type:Working Paper
Appears in Collections:IFS Working Papers, Institute for Fiscal Studies (IFS)

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