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Maintaining and Testing Separability in Demand Systems
Author(s) -
Moschini Giancarlo,
Moro Daniele,
Green Richard D.
Publication year - 1994
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243921
Subject(s) - almost ideal demand system , separable space , econometrics , parametric statistics , price elasticity of demand , representation (politics) , function (biology) , consumer demand , computer science , economics , mathematical optimization , mathematics , microeconomics , statistics , production (economics) , mathematical analysis , evolutionary biology , politics , political science , law , biology
We derive a general elasticity representation of the necessary and sufficient conditions for direct weak separability of the utility function. Parametric restrictions required to implement the separability conditions are presented for three common demand systems: the Almost Ideal, Translog, and Rotterdam. Our empirical application uses the Rotterdam model to test a few separable structures within a complete U.S. demand system emphasizing food commodities. Results, based on size‐corrected likelihood ratio tests, provide support for commonly used separability assumptions about food and meat demand.