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Differential Demand Systems: A Further Look at Barten's Synthesis
Author(s) -
Matsuda Toshinobu
Publication year - 2005
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2005.tb00662.x
Subject(s) - differential (mechanical device) , mathematical economics , on demand , transformation (genetics) , consumer demand , ideal (ethics) , economics , almost ideal demand system , computer science , econometrics , mathematical optimization , mathematics , microeconomics , production (economics) , engineering , commerce , aerospace engineering , biochemistry , chemistry , philosophy , epistemology , gene
Barten's synthetic model is attractive to applied researchers since it is useful for testing the adequacy of the competing functional forms of differential demand systems including the popular Rotterdam and almost ideal demand systems. This article shows that the synthetic model is not a mere artificial composite of the known differential demand systems as it has been considered, but rather viewed as a model in its own right. It is demonstrated that, at the individual consumer level, Barten's model has the same marginal budget shares as generated by specific forms of Engel curves formulated by the Box‐Cox transformation.