Testing for Negativity in a Demand System: A Bayesian Approach

Posted: 23 May 1999

See all articles by Hikaru Hasegawa

Hikaru Hasegawa

Hokkaido University - Graduate School of Economics & Business Administration

Hideo Kozumi

Hokkaido University - Graduate School of Economics & Business Administration

Noriko Hashimoto

Kansai University - Faculty of Economics

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

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

Hikaru Hasegawa (Contact Author)

Hokkaido University - Graduate School of Economics & Business Administration ( email )

Kita-ku Kita 9 Nishi 7
Sapporo, Hokkaido, 060
Japan

Hideo Kozumi

Hokkaido University - Graduate School of Economics & Business Administration ( email )

Kita-ku Kita 9 Nishi 7
Sapporo, Hokkaido, 060
Japan

Noriko Hashimoto

Kansai University - Faculty of Economics ( email )

3-3-35 Yamatecho
Suita, Osaka, 564-8680
Japan

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