Dynamics Almost Ideal: Demand System Application of Kalman Filter
The demand elasticity for a product is the basis of its price determination. The ratio in which a product demand will fall with the rise in its price and, vice versa, can be known as demand elasticity. With increasing population and increasing demand for meat, it is important to accurately estimate...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Czech Statistical Office
2021-03-01
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| Series: | Statistika: Statistics and Economy Journal |
| Subjects: | |
| Online Access: | https://www.czso.cz/documents/10180/143570303/32019721q1_sherafatmand_analyses.pdf/f2b89bd4-63a2-4894-ab11-3aa62e8dd399?version=1.1 |
| Summary: | The demand elasticity for a product is the basis of its price determination. The ratio in which a product demand will fall with the rise in its price and, vice versa, can be known as demand elasticity. With increasing population and increasing demand for meat, it is important to accurately estimate price and income demand elasticities. This paper used almost ideal demand systems (AIDS) with log linear analogue of the Paasche price index, referred to as the corrected Stone index to model consumer demand system. The study employs the Kalman filter estimation strategy, which is based on state-space models that are applied to linear regressions with stochastically time-varying parameters, to determine the evolution of price and income elasticities of red meat and fish demand for monthly data 1997–2017. Variables stationary is tested with Hegy test. Results show that Price elasticity for fish is elastic. Elasticity results indicate that the two products are strong substitutes. Income elasticity indicated that fish considered to be luxury good. |
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| ISSN: | 0322-788X 1804-8765 |