Two-Stage Budgeting and Exact Aggregation |
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| Authors: | Dale W Jorgenson Daniel T Slesnick Thomas M Stoker |
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| Institution: | 1. Department of Economics , Harvard University , Cambridge , MA , 02138;2. Department of Economics , University of Texas , Austin , TX , 78712;3. Sloan School of Management, Massachusetts Institute of Technology , Cambridge , MA , 02139 |
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| Abstract: | This paper presents an econometric model of demand for energy based on two-stage budgeting. The model provides own-price and cross-price elasticities of demand for energy and nonenergy commodities for the United States. These elasticities are estimated separately for households classified by family size, age of head, region, race, and urban versus rural residence. Price elasticities are presented conditional on total energy expenditure and total expenditure on all commodities. The model combines individual cross-section data with aggregate time series data and is based on exact aggregation over individual demand functions. |
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| Keywords: | Price elasticity Translog indirect utility function Nonlinear three-stage least squares Personal consumption expenditures |
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