Forum: help

RE: joint test of compensated price elasticities - micEconAids [ Reply ]
By: Arne Henningsen on 2018-03-20 22:23

Testing whether one or more compensated cross-price elasticities are zero has one problem: the (compensated) cross-price elasticities depend on the prices and the income. Hence, your test results depend on the prices and the income that you use for calculating the elasticities.

I think that you can use a Wald test to jointly test multiple hypothesis regarding the demand elasticities. You can use the Delta method to calculate an approximate variance-covariance matrix of the estimates of the elasticities and then you can apply the Wald test based on the estimates of the elasticities and their variance-covariance matrix.

joint test of compensated price elasticities - micEconAids [ Reply ] By: miguel henry on 2018-02-22 02:22	[forum:45700]
Hello Arne, I am wondering how a two-sided JOINT TEST restricting certain estimated compensated cross-price elasticities to be = 0 against the alternative can be performed after obtaining the kxk Slutsky substitution matrix. Could you please provide some directions? Thank you!