Partisan models of budget politics largely concentrate on the size of government, budget deficits and debt, but most theories have little to say as to what the effect of party politics on both the ...size and the composition of budgets is. This paper seeks to extend previous literature in two directions. First, a model of spending preferences is developed that relates actors' preferred level and allocation of expenditure to electoral gains from fiscal policies. Second, changes in both total expenditure and the expenditure mix of two budget categories are analyzed for the effect of parties' spending preferences as stated in their election manifestos. Using data on 19 OECD countries from 1971 to 1999, the paper finds support for general partisan hypothesis. The results suggest that the actual spending preferences of parties matter whereas they do not indicate that parties of the left consistently differ from parties of the right in their spending behavior.
In all common models of inter-temporal allocation, the assumption of a constant elasticity of intertemporal substitution (EIS) imposes surprising limitations on within-period budget allocations. ...Consequently, the constant EIS assumption can be tested with demand data. In fact, the EIS is pinned down completely by the shape of Engel curves: if the EIS is constant then the EIS can be estimated without variation in the interest rate. That a price elasticity can be estimated without variation in the relevant price illustrates just how strong the constant EIS assumption is. The constant EIS assumption is rejected by demand data.
This paper applies revealed preference theory to the nonparametric statistical analysis of consumer demand. Knowledge of expansion paths is shown to improve the power of nonparametric tests of ...revealed preference. The tightest bounds on indifference surfaces and welfare measures are derived using an algorithm for which revealed preference conditions are shown to guarantee convergence. Nonparametric Engel curves are used to estimate expansion paths and provide a stochastic structure within which to examine the consistency of household level data and revealed preference theory. An application is made to a long time series of repeated cross-sections from the Family Expenditure Survey for Britain. The consistency of these data with revealed preference theory is examined. For periods of consistency with revealed preference, tight bounds are placed on true cost of living indices.
Does food cost more for low-income households? This paper compares two well-known approaches to answering this question. I find that quantity discounts for a broad range of foods are statistically ...significant and economically important. However quantity discounting does not lead to the poor paying more for food. I find that the poor pay less than average for the food they purchase. This is explained by the poor spending a greater share of their income on foods where quantity discounting occurs.
This article introduces a new approach to analyzing whether lottery games are complements or substitutes, and whether a portfolio of lottery games is optimally priced. We estimate Barten's synthetic ...differential demand system for the on-line lottery games operated by the Texas Lottery Commission. The demand system approach imposes theory-consistent demand restrictions that allow identification of parameters for games without price variation. We use the estimated parameters from the Barten model to construct expenditure and price elasticities. Results indicate that on-line games in Texas are generally substitutes for one another and the portfolio of games is not priced to maximize profit.
ABSTRACT Using the annual data of Iran’s economy from 1981-2012, this study examines Wagner’s law and the Keynesian hypothesis about the relationship between the real government expenditure and the ...real GDP. In this regard, this paper investigated the relationship between the total government expenditure, the GDP and the relationship between government educational expenditure and GDP using bivariate and multivariate models. The multivariate model is used to reduce the specified error issues that has not been considered in many studies. The co-integration was examined using the auto regressive distributive lag method (ARDL) of both long-term and short-term relationships. In making the estimations of the Wagner’s view, the variables: real GDP, capital stock and labor force stock respectively, had a positive, a negative, and a positive impact on total government expenditure and the long-term relationship is true in this regard. Additionally, in the estimation of Keynesian model, the educational expenditures, unlike real expenditures of government, had a long-term relationship. In addition, the variable, capital, in both models had a similar effect on the real GDP, and the labor force coefficient in the presence of the total expenditures and educational expenditures were negative and positive respectively.
The need for comparing two regression functions arises frequently in statistical applications. Comparison of the usual regression functions is not very meaningful in situations where the ...distributions and the ranges of the covariates are different for the populations. For instance, in econometric studies, the prices of commodities and people's incomes observed at different time points may not be on comparable scales due to inflation and other economic factors. In this article, we describe a method of standardizing the covariates and estimating the transformed regression function, which then become comparable. We develop smooth estimates of the fractile regression function and study its statistical properties analytically as well as numerically. We also provide a few real examples that illustrate the difficulty in comparing the usual regression functions and motivate the need for the fractile transformation. Our analysis of the real examples leads to new and useful statistical conclusions that are missed by comparison of the usual regression functions.
A unique expenditure panel data set from Spain is used to examine whether the demands of households react to predictable and large changes in household income within the year. For a sample of ...households in which the husband is in full-time employment at all the interviews of the panel, there is no evidence of any synchronization between the income flow in the year and expenditures in the year. The empirical finding appears contrary to those of earlier investigators for several possible reasons: 1. One or the other set of results is wrong and is inadvertently confounding the experimental effect with some contamination. 2. Samples are from different countries. 3. This study conditions on being in full-time employment for the whole sample period. Although households might not smooth over small within-year income changes that are anticipated, they will take account of large changes, particularly if the latter are transparent.
This paper deals with different concepts of income elasticities of demand for a heterogeneous population and the relationship between individual and aggregate elasticities. In general, the aggregate ...elasticity is not equal to the mean of individual elasticities. The difference depends on the heterogeneity of the population and is quantified by a covariance term. Sign and magnitude of this term are determined by an empirical analysis based on the UK Family Expenditure Survey. It is shown that the relevant quantities can be identified from cross-sectional data and, without imposing restrictive structural assumptions, can be estimated by nonparametric techniques. It turns out that the aggregate elasticity significantly overestimates the mean of individual elasticities for many commodity groups.
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