Abstract
The common model that has been used in this book is the dynamic AIDS model given by (4.10), which has been applied to the three-stage budgeting process described in Figure 2.1. Even though we have tried to motivate this decision using theoretical and intuitive arguments, it is obvious that a good deal of arbitrariness has been involved in our choices concerning model and estimation method. In Chapter 5 we presented the results obtained from estimation of this common model. The estimated models for the different countries were subjected to a battery of diagnostic tests, which they passed with varying success. The power of these tests can be quite low against specific forms of misspecification, however, and small changes in model specification can thus lead to quite large changes in our inferences.
Kyrre Rickertsen has written the sixth section of this chapter, which is concerned with Norwegian data. Anders Hummelmose and Ilkka Laurila have performed the computations using Danish and Finnish data.
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References
The papers by Blanciforti and Green (1983b), Blanciforti et al (1986) and Georgantelis et al (1987) do make comparisons, but they all use LAIDS elasticity formulae shown by Buse (1994) to be inaccurate. Teklu et al (1992, p. 53) refer to an unpublished paper showing that the two models yield similar results
Michalek and Keyzer (1992) are also somewhat vague as to how α 0 has been estimated.
All the Swedish results given in this book are based on data from 1963–1989. The LAIDS model has also been estimated using data from 1963–1990, and these results can be found in, for example, Edgerton (1993a).
All the Norwegian results given in this book are based on data from 1960–1988. The models have also been estimated using data from 1960–1991, and these results can be found in Rickertsen (1994).
Most of the results given in this section can be found in more detail in Hummelmose (1992).
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© 1996 Kluwer Academic Publishers
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Edgerton, D. (1996). Extensions to the Common Model. In: The Econometrics of Demand Systems. Advanced Studies in Theoretical and Applied Econometrics, vol 34. Springer, Boston, MA. https://doi.org/10.1007/978-1-4613-1277-2_6
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DOI: https://doi.org/10.1007/978-1-4613-1277-2_6
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