The informational fit and fitting of cross- country demand systems
Measures from statistical information theory are applied to cross-country demand analysis for several purposes. One is to measure the fit of a model for each country separately, including the Strobel decomposition of this fit. A second purpose is to use this measure of fit for statistically estimating the model. It is shown that this method is superior to maximum likelihood when the sample is small but the model is not. A third purpose is to search for outliers. It is argued that a major source of outliers is the underreported food consumption in a number of less developcd countries.
KeywordsMarginal Utility Purchasing Power Parity Income Elasticity Allocation Model Demand System
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