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Substitution Bias and Cost of Living Variability for U.S. Demographic Groups:
Author(s) -
Cobb Steven A.
Publication year - 1991
Publication title -
american journal of economics and sociology
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.199
H-Index - 38
eISSN - 1536-7150
pISSN - 0002-9246
DOI - 10.1111/j.1536-7150.1991.tb02493.x
Subject(s) - economics , econometrics , substitution (logic) , cost of living , price index , quadratic equation , index (typography) , mathematics , standard of living , statistics , demographic economics , macroeconomics , market economy , world wide web , computer science , programming language , geometry
A bstract . Intertemporal cost of living variability is analyzed for households with differing income levels and family characteristics. These indexes are based upon the parameter estimates of a comprehensive system of expenditure equations, the quadratic expenditure system. Despite considerable differences in the group‐specific share parameters as well as nonlinearities in the Engle curves for each group, little variation occurs in these indexes for several U.S. price series over the 1967–1984 time period. As a result, we find little evidence that group‐specific fixed weight indexes are better cost of living approximations than a general Consumer Price Index even though all substitution bias estimates, by income and household type, are quite small.