1988/07/01 by W. E. Diewert, Walter Diewert, T. J. Wales +1
Economics, Econometrics and Finance · #Economic theories and models #Economics of Agriculture and Food Markets #Monetary Policy and Economic Impact
paper · doi:10.1080/07350015.1988.10509667
openalex publication_date 1988/07/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
Empirically estimated demand systems frequently fail to satisfy the appropriate theoretical curvature conditions. We propose and estimate two demand systems for which these conditions can be imposed globally; the first is derived from a normalized quadratic reciprocal indirect utility function and the second is derived from a normalized quadratic expenditure function. The former is flexible if there are no restrictions on its free parameters, but loses flexibility if the curvature conditions need to be imposed. The latter is flexible, in the class of functions satisfying local money metric scaling, even if the curvature conditions need to be imposed.