Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of American and Polish Data
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- handle: 10670/1.9o46a1
- hal: hal-00176109
- ARXIV: 0710.0559
- doi: 10.1198/073500104000000587
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info:eu-repo/semantics/altIdentifier/arxiv/0710.0559
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info:eu-repo/semantics/altIdentifier/doi/10.1198/073500104000000587
info:eu-repo/semantics/OpenAccess
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François Gardes et al., « Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of American and Polish Data », HAL-SHS : économie et finance, ID : 10.1198/073500104000000587
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The problem addressed in this article is the bias to income and expenditure elasticities estimated on pseudo-panel data caused by measurement error and unobserved heterogeneity. We gauge empirically these biases by comparing cross-sectional, pseudo-panel and true panel data from both Polish and American expenditure surveys. Our results suggest that unobserved heterogeneity imparts a downward bias to cross-section estimates of income elasticities of at-home food expenditures and an upward bias to estimates of income elasticities of away-from-home food expenditures. "Within" and first-difference estimators suffer less bias, but only if the effects of measurement error are accounted for with instrumental variables.