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- Title
THE FRISCH CONJECTURE AND DEMAND SYSTEMS.
- Authors
Taylor, Grant A.; Johnson, Lester W.
- Abstract
In 1959, Ragnar Frisch wrote his now famous passage concerning the likely values of the income elasticity of the marginal utility of income (commonly known as the Frisch parameter). The empirica1 validity of the Frisch conjecture, however, is extremely difficult to test with commonly used demand systems. This paper discusses the issues of internal (within a data set) and external (across data sets) testing of the conjecture and provides a small illustrative external test using data for Australia and Sweden. Results also illustrate the sensitivity of Frisch parameter estimates to choice of demand system and serve as a warning to those researchers who use previously estimated values of the parameter in policy analysis.
- Subjects
ELASTICITY (Economics); MARGINAL utility; INCOME
- Publication
Quarterly Journal of Business & Economics, 1987, Vol 26, Issue 1, p63
- ISSN
0747-5535
- Publication type
Article