Quadratic Engel Curves with Measurement Error: Evidence from a Budget Survey

16 Pages Posted: 7 Feb 2007

See all articles by Abbi M. Kedir

Abbi M. Kedir

University of Leicester - Department of Economics

Sourafel Girma

Nottingham University Business School

Abstract

This paper examines the importance of accounting for measurement error in total expenditure in the estimation of Engel curves, based on the 1994 Ethiopian Urban Household Survey. Using Lewbel's [Review of Economics and Statistics (1996), Vol. 78, pp. 718-725] estimator for demand models with correlated measurement errors in the dependent and independent variables, we find robust evidence of a quadratic relationship between food share and total expenditure in the capital city, and significant biases in various estimators that do not correct for correlated measurement errors.

Suggested Citation

Kedir, Abbi M. and Girma, Sourafel, Quadratic Engel Curves with Measurement Error: Evidence from a Budget Survey. Oxford Bulletin of Economics and Statistics, Vol. 69, No. 1, pp. 123-138, February 2007. Available at SSRN: https://ssrn.com/abstract=961721 or http://dx.doi.org/10.1111/j.1468-0084.2007.00470.x

Abbi M. Kedir (Contact Author)

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

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