Original Research

A nutritional goods and a complete consumer demand system estimation for South Africa using actual price data

Marius Louis van Oordt
South African Journal of Economic and Management Sciences | Vol 19, No 4 | a1454 | DOI: https://doi.org/10.4102/sajems.v19i4.1454 | © 2016 Marius Louis van Oordt | This work is licensed under CC Attribution 4.0
Submitted: 10 August 2015 | Published: 25 November 2016

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Marius Louis van Oordt, University of Pretoria, South Africa

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Abstract

Empirical analysis of South African indirect tax policy reform and the welfare consequences of such reform has been limited by a lack of reliable consumer demand system estimations. One reason for potentially unreliable demand estimations is not using actual price data in estimation. In this paper, the results of a nutritional goods demand system estimation and a complete demand system estimation are reported. Both systems were estimated with the use of the quadratic almost ideal demand system (QUAIDS) model incorporating demographic variables and using actual price and expenditure data. Subsequent to estimations, expenditure, own and cross-price elasticities of demand were calculated for both demand systems. The coefficients estimated provided largely statistical significant results and all elasticities calculated seem plausible in sign and magnitude.


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