Some curiosites about the Engel method to estimate equivalence scales

This paper lends legitimacy to the food share as an indicator of welfare by demonstrating the conditions necessary in empirical work for the Engel method of estimating equivalence scales to provide an exact measure of welfare. In analogy to a money metric of utility, the Engel's food share is shown to be a “quantity metric of utility.”Engel method

Counterfactual analysis using a regional dynamic general equilibrium model with historical calibration

This paper develops a regional dynamic general equilibrium model calibrated using two regional SAMs for the Italian region Valle D’Aosta for the years 1963 and 2002. A historical calibration procedure is performed over the 40 years period and a validation exercise ensures that the modelled tendencies closely approximate the actual observed growth patterns of the main regional macroeconomic variables. The dynamic general equilibrium model provides an original and powerful tool for historical counterfactual analysis not available using standard dynamic general equilibrium models. The model is used to compare the growth path followed by the region during the period of interest with different scenarios intended to rank the social desirability of alternative behaviours of the regional administration.historical calibration, historical validation, regional dynamic general equilibrium model, historical counterfactual analysis

Econometric Identification of the Cost of Maintaining a Child

The paper estimates the cost of maintaining a child, of different ages, the cost of being a single and the cost of additional adults present in a family with the aim of making the income levels of different households comparable. The study investigates the issue of econometric identification of equivalence scales within a demand system modified to include demographic characteristics consistently with economic theory. It shows that a robust estimation of equivalence scales must take into formal consideration the problem of econometric identification. The estimation also proposes an encompassing demographic specification which permits isolation of the costs due to differences in needs and differences in household life-styles and scale economies.Equivalence scales, identification, interhousehold comparisons, economies of scale

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,

The passive drinking effect: Evidence from Italy

This paper investigates whether consumption of alcoholic beverages affects distribution of resources among household members. We refer to this effect, highlighting the negative impact that alcohol addicted individuals can have on other household members wellbeing. To investigate this issue we rely on the collective framework and estimate a structural collective demand system. Our results show that for Italian households a high level of alcohol consumption influences the allocation of resources in favour of the husband, with a larger effect in poor households. This evidence implies that alcohol consumption is not only an individual problem. Public costs that are transferred to the other household members should be taken into account when designing social policies.collective model ; demand system ; sharing rule ; alcohol consumption ; intra-household resources distribution ; policy implications

Extension of the Traditional Travel Cost Method to a Collective Framework: An Empirical Application

This study proposes a novel approach to estimating a travel cost model that accounts for intrahousehold resource allocation. We define it ‘Collective Travel Cost Method’ (CTCM). The technique is based on an analogy borrowed from the literature of collective household behavior and adapted to the recreational setting. Knowledge of the travel cost to the recreational site of each household member allows us to identify the sharing rule within the household and to estimate a collective Almost Ideal Demand System that takes into account the role of each member’s preferences for consumption choices and how resources are allocated within the household. We show how to identify and estimate welfare measures, such as the equivalent variation (EV), to infer the Willingness-To-Pay (WTP) to access a natural park of each household member. Moreover, the development and estimation of the CTCM allows: (1) to test whether the WTP estimated by the traditional unitary TCM is significantly different from the WTP estimated by the CTCM; (2) to test whether two spouses have equal or different WTP to access the recreational site, and (3) whether the individual WTP estimated by the CTCM is significantly different from the WTP derived by applying the Contingent Valuation Method (CVM) on the same sample of individuals.collective model, compensating variation, equivalent variation, revealed preferences, travel cost method, Willingness-To-Pay.

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,