Comparing and Choosing Between the Almost Ideal Demand System and The Rotterdam Models For Household Demand Estimation in Urban Areas During the Period (1357-87

Subject Areas : Applied Economics

مصطفی رجبی ¹ , آزاده علیخانی ² , همایون رنجبر ³

1 - مسئول مکاتبات
2 - ندارد
3 - ندارد

Received: 2011-08-03 Accepted : 2011-10-02 Published : 2012-06-21

Keywords: The Rotterdam Demand, Almost Ideal Demand System, Selection Model Test,

Abstract :

Analysis of household behavior and how to allocate its limited income to purchase goods and services, is considered to be one of the important subjects of economics. Because in most countries, economic decision-making in order to adopt the proper economic policy for the benefit and welfare of the community, identifying household preferences and anticipating future needs is essential. Therefore, this study is aimed to analyze the consumption behavior of households in urban areas in the country (1357-87) and to estimate the demand for goods and services , representative of urban households, using the almost ideal demand and the Rotterdam demand: the two models which are compared to select the appropriate model. It should be noted that both models with the assumptions of the model with homogeneous and bound symmetrical form have been estimated.  The results of own price elasticity are approximately the same (all with the expected sign) as cross-price elasticity in both models and differences found in the two models at the same level of income is 95 percent. While both types of model Product Groups of income represent equal income. Finally, the comparison test between the two models also indicate a lack of significant difference between the two models investigated.