Estimated Demand Elasticities by 2 Methods

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Presentation transcript:

Estimated Demand Elasticities by 2 Methods Multiple Regression Estimated Demand Elasticities by 2 Methods H. Schultz (1933). “A Comparison of Elasticities of Demand by Different Methods,” Econometrica, Vol. 1, #3, pp. 274-308. H. Schultz(1925). “Appendix 2,” Journal of Political Economy, Vol. 33, #6, pp. 634-637.

Data Description and Models Data: U.S. Sugar Consumption and Prices:Years 1896-1914 Dependent Variable: Consumption per Capita (Q, lbs) Independent Variables: Real Price (BLS adjusted 1913=100, all commodities) Year (t, year – 1905) Models: Linear and Nonlinear (Intrinsically Linear):

Data Note: Sugar is in 1000s of Tons, Pop is in Millions  Q = 2*Sugar/Pop

Elasticity of Demand

Effects of Time Shift (Ignoring Error terms)

Regression Results – Model 1

Regression Results – Model 2

Estimated Elasticities of Demand and Q/t Model 1: Model 2: