Abstract:
In this study we estimate the Brazilian consumer demand system through family expenditure data, which cover all consumption categories. The model is estimated from family-level expenditures on seven consumption categories, and a new set of regional cost-of-living indexes. The sources for expenditures are the national expenditure surveys conducted in 1986/87 and 1995/96, which collected data from 11 metropolitan areas. Corresponding price indexes were constructed from detailed commodity prices, also from each metropolitan area. The salient features of our study are: a) price variations come from both time and regional differences, which allows us to estimate price elasticities with high precision; b) we have large variations in income (total expenditures) which is rarely available in aggregated data; and c) we can control for time specific factors by exploiting the panel structure of the data set.
