@article{Gharibnavaz:333000,
      recid = {333000},
      author = {Gharibnavaz, Mohammad Reza and Verikios, George},
      title = {Estimating LES Parameters with Heterogeneous Households  for a CGE Model},
      address = {2018},
      year = {2018},
      note = {Presented at the 21st Annual Conference on Global Economic  Analysis, Cartagena, Colombia},
      abstract = {In CGE models exogenously-specified elasticity parameters  describing the behaviour of consumers, producers and trade  patterns calibrate the model equations to analyse a wide  array of socio-economic issues. Since CGE models give no  insight into how aggregate changes in the economy affect  individuals, a tendency of linking microsimulation and CGE  models has emerged in recent studies to highlight the  distributional effects of policy simulations by using the  complementary advantages of both approaches. Therefore, it  is desirable to represent disaggregated households in a CGE  model to evaluate the distributional effects of policy  simulations.  We estimate the behavioural parameters  essential for the calibration of the demand side of a CGE  model for 5 household types in Australia, grouped according  to income. We utilise the 2009-10 Household Expenditure  Survey (HES) to estimate the LES parameters and expenditure  elasticities for Australian households. The Seemingly  Unrelated Regression Equations (SURE) model is used to  solve a 21-good demand system simultaneously. It is worth  noting that the econometric estimation is done in a model  whose structure is consistent with the CGE model. A  comparison of the results for household income quintiles  suggests that except for the highest quintile the estimated  subsistence consumption parameters for some commodities  such as Agricultural Products, Processed Food, Electricity,  Gas and Water are relatively higher for lower income  quintiles. The estimated expenditure elasticities for the  21 aggregated commodities indicate that Agriculture,  Forestry and Fishing, Electricity, Gas, Water and Waste,  Transport and Postal Services, Administrative Services and  Other Services are necessities for all income groups.  Results also reveal that most of the remaining commodities  are luxuries for lower income quintiles, while they appear  to be necessities for the wealthier households.},
      url = {http://ageconsearch.umn.edu/record/333000},
}