Empirical Economics

, Volume 28, Issue 2, pp 353–364

Model selection when estimating and predicting consumer demands using international, cross section data

  • J. A. L. Cranfield
  • James S. Eales
  • Thomas W. Hertel
  • Paul V. Preckel

DOI: 10.1007/s001810200135

Cite this article as:
Cranfield, J., Eales, J., Hertel, T. et al. Empirical Economics (2003) 28: 353. doi:10.1007/s001810200135

Abstract.

This paper assesses the ability of five structural demand systems to predict demands when estimated with cross sectional data spanning countries with widely varying per capita expenditure levels. Results indicate demand systems with less restrictive income responses are superior to demand systems with more restrictive income effects. Among the least restrictive demand systems considered, An Implicitly, Directly Additive Demand System (AIDADS) and Quadratic Almost Ideal Demand System (QUAIDS) seem roughly tied for best, while the Quadratic Expenditure System (QES) is a close second. Given differences in the characteristics of AIDADS and QUAIDS, it is concluded the former is better suited to instances where income exhibits wide variation and the latter to cases when prices exhibit considerable variation.

Key words: Consumer demandmodel selection

Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • J. A. L. Cranfield
    • 1
  • James S. Eales
    • 2
  • Thomas W. Hertel
    • 2
  • Paul V. Preckel
    • 2
  1. 1.Department of Agricultural Economics and Business, University of Guelph, Guelph, Ontario, CANADA, N1G 2W1 (e-mail: jcranfie@agec.uoguelph.ca)CA
  2. 2.Department of Agricultural Economics, Purdue University, West Lafayette, Indiana, U.S.A., 47907-1145US