Linear Regression – Estimating Demand Elasticities U.S. Sugar Consumption H. Schultz (1933). “A Comparison of Elasticities of Demand Obtained by Different Methods,” Econometrica, Vol.1, #3,pp H. Schultz (1925). “Appendix 2,” Journal of Political Economy, Vol.33, #6, pp

Problem Description Dependent Variable: Consumption per Capita (Q) Independent Variables: o Real Price (P), BLS adjusted, 1913=100, all commodities o Year (t), centered around 1905 Models: o Additive: o Multiplicative: o Linearized Multiplicative Model:

Elasticities of Demand (Ignoring error terms)

Effects of Time Shift (Ignoring Error terms)

Data Note: On Figures 2A-2C, Schultz is using Q/10. Plots in this series are based on Q

Regression – Model 1

Regression – Model 2