Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1430: Nonparametric Analysis of the Mixed-Demand Model

Per Hjertstrand ()
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Per Hjertstrand: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: The mixed-demand model allows for very flexible specification of what should be considered endogenous and exogenous in demand system estimation. This paper introduces a revealed preference framework to analyze the mixed-demand model. The proposed methods can be used to test whether observed data (with measurement errors) are consistent with the mixed-demand model and calculate goodness-of-fit measures. The framework is purely non-parametric in the sense that it does not require any functional form assumptions on the direct or indirect utility functions. The framework is applied to demand data for food and provides the first nonparametric empirical analysis of the mixed-demand model.

Keywords: Demand systems; Measurement errors; Mixed-demand; Non-parametric; Revealed preference

JEL-codes: D11; D12

Language: English

30 pages, May 11, 2022

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