GTAP Resources: Resource Display
| GTAP Resource #7876 |
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"Inferring Frisch Parameters from Demand Elasticities: Constructing a Database of Frisch Parameters Using Generalised Cross-Entropy Estimation" Authors: Boysen, Ole Abstract This study addresses the scarcity of empirical Frisch parameters—the elasticity of the marginal utility of expenditure—a necessity for calibrating Linear Expenditure Systems (LES) in applied computable general equilibrium (CGE) modelling. While micro-econometric literature provides a wealth of income and price elasticities, direct estimates of the Frisch parameter remain disproportionately scarce. We propose a novel methodological bridge using a Generalised Cross-Entropy (GCE) estimation procedure to "back out" the Frisch parameters most consistent with existing empirical elasticity sets within an Extended LES (ELES) framework. By employing an information-theoretic approach, the GCE procedure reconciles reported elasticities with the rigorous integrability restrictions dictated by demand theory, including adding-up, homogeneity, symmetry, and curvature. We apply this framework to a comprehensive longitudinal database of demand elasticities extracted from household survey-based demand system estimation studies. The contribution is twofold: first, the construction of a robust, cross-country database of Frisch parameters for use in applied demand modelling; and second, an analytical investigation into how these parameters evolve across space, time, and varying levels of economic development. Our results provide a theoretically consistent empirical foundation for demand system calibration, narrowing the gap between microeconomic evidence and macroeconomic policy simulations. |
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- Other data bases and data issues - Calibration and parameter estimation - Not Applicable |
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Public Access  Frisch parameter (96.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/20/2026 1:44:43 PM
