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Office of Survey Methods Research
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Published Year: 2000
Survey/Program(s): Office of Prices and Living Conditions
Catalog: Economic Working Paper
WP Number: WP-332
Publication Status / Disposition: Available from the Office of Prices and Living Conditions (September 2000).
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A Complete Characterization of the Implications of Slutsky Symmetry for the Linear, Log‐Linear, and Semi‐Log Incomplete Demand System Models
Abstract
This paper extends previous research by LaFrance [1985, 1986, 1987] by deriving the necessary parameter restrictions for two additional classes of incomplete demand system models to have symmetric Slutzky substitution matrices in a local neighborhood of price and income values. In contrast to LaFrance's previous research, this paper considers models that treat expenditures and expenditure shares as the dependent variables in the specified incomplete demand systems. Along with the eight models considered by LaFrance, the sixteen alternative specifications considered here represent a complete characterization of the implications of Slutzky symmetry for the linear, log-linear, and semi-log incomplete demand system models.