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Abstract

Using linear in the coefficients specifications (LCS), previous estimates of the marginal propensity to spend on food out of food stamps are about 4 to 5 times the MPS out of income. This magnitude implies that food expenditures would fall drastically if the program was cashed-out. The LCS and a specification of the expenditure equation based on a generalization of Roy's identity and a translog indirect utility function are estimated. The implications of these functional forms on cashing-out the Food Stamp Program are discussed.

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