Total expenditure endogeneity in a system of demand for public consumption expenditures in the UK


Pitarakis, Jean-Yves and Tridimas, George (1999) Total expenditure endogeneity in a system of demand for public consumption expenditures in the UK. Economic Modelling, 16, (2), 279-291. (doi:10.1016/S0264-9993(98)00043-1).

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Description/Abstract

Contrary to standard empirical studies of demand for public consumption expenditure a system of demand equations is examined where the total expenditure variable is considered endogenous in the sense that it is correlated with the equation errors. Using a recently available UK dataset we explore alternative specifications of an auxiliary equation for total expenditure, which depend on prices and other instrumental variables, and apply a Hausman-type and a likelihood ratio test of exogeneity. The results reject exogeneity and suggest that when endogeneity of total expenditure is taken into account the constraints of homogeneity and symmetry cannot be rejected.

Item Type: Article
ISSNs: 0264-9993 (print)
1873-6122 (electronic)
Keywords: demand systems, public expenditure, endogeneity
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 173937
Date Deposited: 09 Feb 2011 09:56
Last Modified: 27 Mar 2014 19:21
URI: http://eprints.soton.ac.uk/id/eprint/173937

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