EXPLORING ALTERNATIVES FOR ESTIMATING SYSTEMS OF EQUATIONS WITH MULTIPLE CENSORED VARIABLES: FARM OUTPUT SUPPLY AND INPUT DEMAND

This paper explores two alternatives for estimating systems of equations with multiple censored variables: Maximum Simulated Likelihood and a two-step technique that seems to be well suited for large samples. The empirical part of the paper estimates a system of cost, cost shares and revenue shares equations of Italian farms using both approaches.Research Methods/ Statistical Methods,

The Collective Household Enterprise Model: An Empirical Analysis

This paper estimates a household model where both the production and consumption sides are observed. The household activities produce both marketable and nonmarketable products. Family members consume market goods, domestically produced goods and leisure. This household equilibrium model is described within a collective framework. The data are from a nation-wide sample of Italian farm-households. The estimation is implemented using a generalized Heckman estimator to account for corner solutions generated by the fact that not all households are engaged in all enterpreneurial activities and do not consume some of all goods and leisure. The identification of the sharing rule stems from the assignability of clothing consumption and leisure.Household collective model, household and domestic productions, consumption and leisure, separability, Consumer/Household Economics,

A multi-regional general equilibrium model to assess policy effects at regional level

This paper develops a multi-regional general equilibrium model (MEG-R) to compare the social desirability of the CAP reform in the three Italian macro-regions: North, Center and South. The model employs a mixed complementary framework that allows for the decision of not producing a particular crop in one or more regions and presents an attempt to model interregional trade flows. The model incorporates the links between production and consumption that characterize farm household’s behavior and allows for heterogeneous household responses across regions. Results show a general tendency to reallocations from cereal crops to forage that appear more severe in the South. In this region, the reduction in crops cannot be translated into an effective expansion of fodder and could lead to the “deactivation” of the land.Multi-regional general equilibrium model, farm households, interregional trade, Agricultural and Food Policy, C68, R13, Q18,

A multi-regional general equilibrium model to assess policy effects at regional level

In this paper we develop a multi-regional general equilibrium model (MEG-R) to compare the social desirability of the CAP reform in the three Italian macro-regions: North, Center and South. The model employs a mixed complementary framework that allows for the decision of not producing a particular crop in one or more regions and presents an attempt to model interregional trade flows. The model incorporates the links between production and consumption that characterize farm household’s behavior and allows for heterogeneous household responses across regions. Results show a general tendency to reallocations from cereal crops to forage that appear more severe in the South. In this region, the reduction in crops cannot be translated into an effective expansion of fodder and could lead to the “deactivation” of the land.Multi regional general equilibrium model, farm households, interregional trade., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,

Primal-Dual Estimation of a Linear Expenditure Demand System

Efficient estimates require the utilization of all the available theoretical and statistical information. This fact suggests that econometric models based on an explicit optimization theory might achieve more efficient estimates when all the primal and dual relations are used for a joint estimation of the model’s parameters. We present a discussion of this idea using a Linear Expenditure System (LES) of consumer demand. We assume that the risk-neutral household chooses its consumption plan on the basis of expected information. Some time after that decision, the econometrician attempts to measure quantities and prices and in so doing commits measurement errors. Hence, the econometric model is an errors-in-variables nonlinear system of equations for which there is no known consistent estimator. We propose an easy-to-implement estimator and analyze its empirical properties by a Monte Carlo simulation that shows a relatively small bias.Consumer demand functions, primal-dual, linear expenditure system, Demand and Price Analysis, Research Methods/ Statistical Methods, D0,

New Results On Censored Regression with Applications to Transactions Costs, Household Decisions and Food Purchases

We generalize the Tobit censored regression to permit unique unobserved censoring thresholds conditioned by covariates and a set of common response coefficients. This situation , we argue, is one arising frequently in applications of censored regression and we provide three diverse examples to motivate the theory. We derive a robust estimation algorithm with three noteworthy features. First, by augmenting the observed-data likelihood with the censored observations, the estimation strategy is the same as Chib (1992) who derives Bayes estimates of the conventional censored regression. Second, by virtue of its generality, the model is applicable to a much broader set of circumstances than the conventional Tobit regression, which is nested as a special case of the more general framework. Third, despite its generality and wide applicability, the estimation algorithm is very simple, evidencing routine application of Markov chain Monte Carlo methods (MCMC)-Gibbs sampling in particular- and requiring only modest extensions of the basic algorithm in Chib (1992). The model and procedures are illustrated empirically in three applications that we use to motivate the theory, namely problems in transactions-costs economics, household decision-making and food-consumption.conditionally censored Tobit regression, Bayes inference, Food Consumption/Nutrition/Food Safety, O11, C34, O13,

THE DEMAND FOR FLUID MILK PRODUCTS IN THE U.S.: A DEMAND SYSTEMS APPROACH

The demand for fluid milk products has changed dramatically in recent years not only in terms of lower levels consumed but also in terms of the composition of the products consumed. A time-series based demand system analysis of the market for lowfat and whole milk products is developed incorporating the effects of changes in prices and demographic characteristics. From the estimated model, the impacts of future changes in the demographic profile of the U.S. population on fluid milk demand are analyzed.Demand and Price Analysis, Livestock Production/Industries,

An Integrated Database to Measure Living Standards

This study generates an integrated database to measure living standards in Italy using propensity score matching. We follow the recommendations of the Commission on the Measurement of Economic Performance and Social Progress proposing that income, consumption of market goods and non-market activities, and wealth, rather than production, should be evaluated jointly in order to appropriately measure material welfare. Our integrated database is similar in design to the one built for the US by the Levy Economics Institute to measure the multiple dimensions of well-being. In the United States, as is the case for Italy and most European countries, the State does not maintain a unified database to measure household economic well-being and data sources about income and employment surveys and other surveys on wealth and the use of time have to be statistically matched. The measure of well-being is therefore the result of a multidimensional evaluation process no longer associated with a single indicator as is usually the case when measuring gross domestic product. The estimation of individual and social welfare, multidimensional poverty and inequality does require an integrated living standard database where information about consumption, income, time use and subjective well-being are jointly available. With this objective in mind, we combine information available in four different surveys: the European Union Statistics on Income and Living Conditions Survey, the Household Budget Survey, the Time Use Survey, and the Household Conditions and Social Capital Survey. We perform three different statistical matching procedures to link the relevant dimensions of living standards contained in each survey and report both the statistical and economic tests carried out to evaluate the quality of the procedure at a high level of detail

Collective Household Welfare and Intra-household Inequality

We investigate the relationship between the individual and household indirect utility functions in the context of a collective household model. Our analysis pro- duces new results that explain how the rule governing the distribution of resources among household members is related to the measurement of household welfare and intra-household inequality. We show that in a collective model of private consumption, income shares are equal to the product of two weights: the Pareto weight and a distribution weight reflecting income effects across individuals. For a weighted Bergsonian representation of household utility and general assump- tions about individual preferences, we derive the associated household welfare functions and intra-household inequality measures belonging to a family of en- tropy indexes. We illustrate our findings with an empirical application that esti- mates a collective demand system to recover associated individual and household welfare functions along with the measures of intra-household inequality. This is the first application that estimates the Pareto weight and examines its role within a measure of income dispersion among household members