U.S. Consumer Behavior over the Postwar Period: An Almost Ideal Demand System Analysis

This study analyzes U.S. consumer budget allocations among 11 aggregate commodity groups for the period 1948-78. Also budget allocations among four food groups are analyzed for this same period. Several alternative model specifications are analyzed. Emphasis is given to the Deaton-Muellbauer (1980a) "almost ideal demand system." A dynamic version of their model is developed and quantified. Comparison of the static and dynamic formulations are compared with similar specifications for the "linear expenditure system." The predictive performance of these four models for the 11 commodity groups is tested for the sample period (1948-78) and for the years 1979-81. The purpose of this study was to develop improved methods for analyzing demand relationships for food and other goods. The results for the dynamic or habit formation specifications appear promising, although no completely satisfactory results for all goods are claimed.

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Giannini Foundation Monograph Number 40

 Record created 2017-04-01, last modified 2018-05-09

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