Abstract
In this chapter, we undertake a comparison of the elasticities estimated from the NIPA time-series data with their counterparts estimated in earlier chapters from the BLS consumer expenditure surveys. Two comparisons will be made. The first is of total-expenditure elasticities for the CES 29 categories of expenditure analyzed in Chapter 11, while the second is of both total-expenditure and price elasticities at the CES 6-category level analyzed in Chapter 6. In both cases, comparison is to steady-state NIPA elasticities.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Although the exercises in this chapter might seem in principle to be straightforward, this is unfortunately not the case, for there are many differences between the time series produced by the Department of Commerce and the household surveys undertaken by the Department of Labor. While both data-collection enterprises are intended to measure the same phenomenon, namely, the consumption expenditures of American households, they differ not only in methods, but also in concepts. The classification of expenditures is in general quite different. Some time-series items do not appear in the surveys at all, including several fictitious business services (such as “services rendered without payment by financial institutions”), food and clothing for the military, expenditures by non-profit organizations, and expenditures by foreign visitors to the U.S. The treatment of owner-occupied housing is markedly different, for the time series give an imputed value for space rental value, while the surveys give actual expenditures by households.
- 2.
Aggregation proceeds by summing the real expenditures for the categories involved, and then obtaining the real price from the ratio of summed nominal expenditures to the summed real expenditures divided by the deflator for total PCE.
- 3.
All six of the estimated equations are B-C models. The equations for total housing, other housing, and reading materials are excellent statistically, while the equations for the other three new categories are only fair to good.
- 4.
A NIPA category corresponding to the CES miscellaneous category has not been constructed.
- 5.
The problem with the NIPA clothing elasticity, as was noted in Chapter 15, is the extremely strong trend in the dependent variable, which appears to adversely affect the estimates of the structural coefficients relative to one another.
- 6.
The equation for food at home is a B-C model of fair-to-middling statistical quality that shows rapid flow-adjustment and a negative β. The equation for miscellaneous expenditures is a state-adjustment model of excellent statistical quality that shows very mild inventory adjustment.
- 7.
Both total-expenditure and price elasticities are included in this diagram, total-expenditure obviously in the first quadrant and price in the third.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2010 Springer Science+Business Media, LLC
About this chapter
Cite this chapter
Taylor, L.D. (2010). Comparison of Time-Series and Cross-Sectional Elasticities. In: Consumer Demand in the United States. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0510-9_17
Download citation
DOI: https://doi.org/10.1007/978-1-4419-0510-9_17
Published:
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4419-0509-3
Online ISBN: 978-1-4419-0510-9
eBook Packages: Business and EconomicsEconomics and Finance (R0)