The Theoretical Regularity Properties of the Normalized Quadratic Consumer Demand Model

We conduct a Monte Carlo study of the global regularity properties of the Normalized Quadratic model. We particularly investigate monotonicity violations, as well as the performance of methods of locally and globally imposing curvature. We find that monotonicity violations are especially likely to occur, when elasticities of substitution are greater than unity. We also find that imposing curvature locally produces difficulty in the estimation, smaller regular regions, and the poor elasticity estimates in many cases considered in the paper. Imposition of curvature alone does not assure regularity, and imposing local curvature alone can have very adverse consequences.

The Theory of Functional Forms of the Consumer Demand System and its Application

This dissertation studies the consumer demand system focusing on its functional forms in the theoretical aspect and the empirical aspect. The theoretical part investigates the regularity property of the consumer demand system with the normalized quadratic functional form. We display the regular regions of the model whose parameters are estimated using different methods of imposing curvature. We find that the model often violates the monotonicity condition regardless of how curvature is imposed. The empirical part applies functional forms of the consumer demand system which are flexible in the total expenditure in estimating the cost of children using Japanese household expenditure data. We find that the cost of additional child is higher for poor households than for rich households. This suggests that the child-support program being proposed by the Japanese government should have a mechanism to decrease the benefit as household income increases

The Theoretical Regularity Properties of the Normalized Quadratic Consumer Demand Model

We conduct a Monte Carlo study of the global regularity properties of the Normalized Quadratic model. We particularly investigate monotonicity violations, as well as the performance of methods of locally and globally imposing curvature. We find that monotonicity violations are especially likely to occur, when elasticities of substitution are greater than unity. We also find that imposing curvature locally produces difficulty in the estimation, smaller regular regions, and the poor elasticity estimates in many cases considered in the paper. Imposition of curvature alone does not assure regularity, and imposing local curvature alone can have very adverse consequences