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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), pp. 279-291. (doi:10.1016/S0264-9993(98)00043-1).

Record type: Article


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.

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Published date: 1 April 1999
Keywords: demand systems, public expenditure, endogeneity


Local EPrints ID: 173937
ISSN: 0264-9993
PURE UUID: 817da5a8-ecad-439e-b3cb-4b0b0a975408

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Date deposited: 09 Feb 2011 09:56
Last modified: 18 Jul 2017 12:12

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Author: Jean-Yves Pitarakis
Author: George Tridimas

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