Cherchye, Laurens, Demuynck, Thomas, De Rock, Bram et al. (1 more author) (2020) Revealed Preference Analysis with Normal Goods:Application to Cost-of-Living Indices. American Economic Journal: Microeconomics. pp. 165-188. ISSN 1945-7669
Abstract
We present a revealed preference methodology for nonparametric demand analysis under the assumption of normal goods. Our methodology is flexible in that it allows for imposing normality on any subset of goods. We show the usefulness of our methodology for empirical welfare analysis through cost-of-living indices. An illustration to US consumption data drawn from the Panel Study of Income Dynamics (PSID) demonstrates that mild normality assumptions can substantially strengthen the empirical analysis. It obtains considerably tighter bounds on cost-of-living indices and a significantly more informative classification of better-off and worse-off individuals after the 2008 financial crisis.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | Copyright 2020 American Economic Association. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) |
Depositing User: | Pure (York) |
Date Deposited: | 18 Aug 2020 17:20 |
Last Modified: | 29 Oct 2024 01:03 |
Published Version: | https://doi.org/10.1257/mic.20180133 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.1257/mic.20180133 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:164586 |