Publication type
Thesis/Degree/Other Honours
Author
Publication date
June 1, 2002
Abstract:
In this thesis we are concerned with implementing the theoretical concept of Consumption. We focus particularly on the formalisation of the notion of a heterogeneous population. Since we specifically want to allow for preference heterogeneity, we devise a Demand System which dispenses with standard assumption of additive seperability over time. As is shown rigorously in the second chapter, the formalisation of the notion of a heterogeneous population yields to the concept of a theoretical Microrelation, which can be locally approximated by the devised Demand System. Further it is shown that this concept is mirrored in the observable world by the empirical Microrelation, and it is argued that this structure can be best estimated by an additive nonparametric model.
This Econometric Model is examined is in the third chapter in great detail, and its asymptotic properties, in particular asymptotic normality are being established. We start with the proof of the main building block, namely the local polynomial model. Then a new estimation technique for additive models is proposed, based on the idea of quasi-differencing. We extend this model to include linear interaction terms, and introduce another kind of interaction which is tailor-made for the inclusion of prices. These various possibilities to treat variables depending on the interest of the researcher with the ability of the model to control for the problem of dimensionally are arguably the biggest advantages of the model.
An application of the framework and the additive model to British data (FES and BHPS) establishes various interesting features as for insurance the wide acceptance of the Weak Axion and unequivocal support for the Law of Demand or some support for intertemporal optimization.
Subject
Link
#508508