Demand System Estimation in the Absence of Price Data: Evidence from Turkey

Er E., Gemicioğlu S.

UEK-TEK 2018, Antalya, Turkey, 1 - 03 November 2018, pp.1

  • Publication Type: Conference Paper / Summary Text
  • City: Antalya
  • Country: Turkey
  • Page Numbers: pp.1
  • Van Yüzüncü Yıl University Affiliated: Yes


In this study we evaluate the feasibility of estimating a system of demand equations in the absence of price information using the approach developed by Lewbel (1989).  Following the method described in Moro, Castellari and Sckokai (2018), we constructed Stone-Lewbel (SL) price indices for different commodity groups. The budget shares and the Consumer Price Indices (CPIs) of the goods comprising the commodity groups, allow us to recover household-level prices. In this study we assess, how elasticity estimates are susceptible to traditional parametric demand system estimations using CPI to that using SL prices. To do this, first we used yearly CPI to construct the SL price index then we computed elasticity estimates for three commodity groups using the Quadratic Almost Ideal Demand System (QUAIDS) model as the parametric demand system. We used data from Turkey Household Budget Survey for years 2003-2014. The results suggest that it is possible to accurately estimate a demand system even in the absence of price information.