Estimation of the Brazilian Consumer Demand System

IPEA Discussion Paper No. 793

28 Pages Posted: 8 Aug 2003

See all articles by Eduardo P.S. Fiuza

Eduardo P.S. Fiuza

Institute of Applied Economic Research (IPEA) - Directory of Macroeconomic Policy & Studies (DIMAC)

Seki Asano

Tokyo Metropolitan University

Abstract

In this study we estimate the Brazilian consumer demand system through family expenditure data, which cover all consumption categories. The model is estimated from family-level expenditures on seven consumption categories, and a new set of regional cost-of-living indexes. The sources for expenditures are the national expenditure surveys conducted in 1986/87 and 1995/96, which collected data from 11 metropolitan areas. Corresponding price indexes were constructed from detailed commodity prices, also from each metropolitan area. The salient features of our study are: a) price variations come from both time and regional differences, which allows us to estimate price elasticities with high precision; b) we have large variations in income (total expenditures) which is rarely available in aggregated data; and c) we can control for time specific factors by exploiting the panel structure of the data set.

Contrary to the rule of thumb in empirical studies of demand systems, the estimation results display consistency with demand theory, and elasticity estimates are close to economic common sense. The estimated system will serve as a micro-economic basis for evaluating various policy-related issues.

Keywords: Consumer demand system, Almost ideal demand system, Brazilian family expenditures

JEL Classification: C33, C81, D12

Suggested Citation

Pedral Sampaio Fiuza, Eduardo and Asano, Seki, Estimation of the Brazilian Consumer Demand System. IPEA Discussion Paper No. 793, Available at SSRN: https://ssrn.com/abstract=290288 or http://dx.doi.org/10.2139/ssrn.290288

Eduardo Pedral Sampaio Fiuza (Contact Author)

Institute of Applied Economic Research (IPEA) - Directory of Macroeconomic Policy & Studies (DIMAC) ( email )

Av. Pres. Antonio Carlos, 51 - 17o andar
Rio de Janeiro
Brazil
+55 21 3515-8689 (Phone)
+55 21 3515-8615 (Fax)

Seki Asano

Tokyo Metropolitan University ( email )

1-1 Minami Ohsawa, Hachioji-shi
Tokyo 192-0397
Japan
81 426-77-2311 (Phone)
81 426-77-2304 (Fax)

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