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Imposing Local Curvature Conditions in Flexible Demand Systems

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  • Moschini, Giancarlo
Abstract
By reparameterizing the basic translog and the log translog demand systems and exploiting the fact that the Slutsky matrix must be negative semidefinite but cannot he negative definite, it is shown that a recently proposed simple procedure to maintain locally the curvature property of consumer theory can be applied to these popular translog models as well. The proposed procedure can also be applied to other demand-system specifications such as, for example, the nonseparable generalized linear expenditure system.

Suggested Citation

  • Moschini, Giancarlo, 1999. "Imposing Local Curvature Conditions in Flexible Demand Systems," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 487-490, October.
    • Handle: RePEc:bes:jnlbes:v:17:y:1999:i:4:p:487-90
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