Statistics – Applications
Scientific paper
2007-10-02
Journal of Business & Economic Statistics 23, 2 (2005) 242-253
Statistics
Applications
12 p
Scientific paper
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.
Duncan Greg
Gardes François
Gaubert Patrice
Gurgand Marc
Starzec Christophe
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