Standard Errors for Elasticities: A Comparison of Bootstrap and Asymptotic Standard Errors

This article compares two methods of deriving standard errors for elasticities in a linear expenditure demand system with first-order autoregressive errors. The first is the ordinary Taylor series method and the second is Efron's bootstrap. In an example problem, these two methods yielded similar values for the standard errors, with the exception of the income elasticity standard errors, for which the asymptotic standard errors were apparently too large by a factor of two.