Testing for Negativity in a Demand System: A Bayesian Approach
Posted: 23 May 1999
Abstract
The paper introduces Bayesian inference into a demand model. This allows us to test for the negativity condition of the substitution matrix which is difficult to handle directly in the traditional approach. To illustrate the Bayesian inference procedures, we estimate the Rotterdam model and test the demand properties using Japanese data. The empirical results show the importance of specifically considering negativity in demand analysis.
JEL Classification: C11, D12
Suggested Citation: Suggested Citation
Hasegawa, Hikaru and Kozumi, Hideo and Hashimoto, Noriko, Testing for Negativity in a Demand System: A Bayesian Approach. Available at SSRN: https://ssrn.com/abstract=164831
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