1 / 8

90 likes | 695 Views

Cross Equation Constraints. Stone-Geary Utility Function Linear expenditure system. U= (q 1 - 1 ) (q 2 - 2 ) + =1 and are expenditure shares (above subsistence) i subsistence quantity of good I. Stone-Geary Utility Function.

Download Presentation
## Cross Equation Constraints

**An Image/Link below is provided (as is) to download presentation**
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.
Content is provided to you AS IS for your information and personal use only.
Download presentation by click this link.
While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

**Stone-Geary Utility FunctionLinear expenditure system**• U= (q1 - 1) (q2 - 2) • + =1 • and are expenditure shares (above subsistence) • i subsistence quantity of good I**Stone-Geary Utility Function**• q1 = 1 + (/p1)(M - p11 - p22) • M is money income • pi is price of good i • q2 = 2 + (/p2)(M - p11 - p22)**Stone-Geary Utility Function**• q1 = 1 (1- )+ (M/p1)- (p2 /p1) 2 • q1 = a0 + a1 (M/p1) + a2 (p2 /p1) + 1 • q2 = 2 + (M/p2)- (p1 /p2) 1 • q2 = b0 + b1 (M/p2) + b2 (p1 /p2) + 2**Stone-Geary Utility Function**• Constraints • a1 + b1 = 1 • a2 = b0 • a0 = b2 • q1 = a0 + a1 (M/p1) + a2 (p2 /p1) + 1 • q2 = b0 + b1 (M/p2) + b2 (p1 /p2) + 2**Constraints in Stata**• Constraint define # “condition” • example 1: • constraint define 1 var1=var2 • coefficient on var1 equals coefficient on var2 • example 2: • constraint define 2 [q1]constant = [q2]var3 • constant in q1 equation equals coefficient on var3 in q2 equation**Seemingly Unrelated Regressionsin Stata**• SUREG ([eqname1]: depvar1 indvar11 indvar12…, noconstant) ([eqname2]: depvar2 indvar21 indvar22…, noconstant), constraint(constraint numbers) • eqname is optional • noconstant is optional • constraint(.) is optional**Seemingly Unrelated Regressionsin Stata**• SUREG ([q1]: q1 M/p1 p2/1) ([q2]: q2 M/p2 p1/2) • test [q1]constant = [q2] p1/2 • constraint define 2 [q1]constant=[q2] p1/2 • SUREG ([q1]: q1 M/p1 p2/1) ([q2]: q2 M/p2 p1/2), constraint(2)

More Related