Quadratic Engel Curves with Measurement Error: Evidence from a Budget Survey

• Autores: Abbi Kedir, Sourafel Girma
• Localización: Oxford bulletin of economics and statistics, ISSN 0305-9049, Vol. 69, Nº. 1, 2007, págs. 123-138
• Idioma: inglés
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• Resumen

  • This paper examines the importance of accounting for measurement error in total expenditure in the estimation of Engel curves, based on the 1994 Ethiopian Urban Household Survey. Using Lewbel's [Review of Economics and Statistics (1996), Vol. 78, pp. 718–725] estimator for demand models with correlated measurement errors in the dependent and independent variables, we find robust evidence of a quadratic relationship between food share and total expenditure in the capital city, and significant biases in various estimators that do not correct for correlated measurement errors.