Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model

This paper characterizes consumer demand patterns across the development spectrum using elasticity estimates from a demand system possessing non-linear Engel effects. Demands for six broadly defined goods are then projected under the assumption that per capita expenditure growth rates differ across the development spectrum. Such projections illustrate the extent to which non-linear income effects generate more plausible demand responses. Estimated marginal budget shares for food decline in a logistical manner and range from about 0.5 for Ethiopia to less than 0.05 for the USA. Engel elasticities for food range from 0.95 for Ethiopia to less than 0.1 for the USA. (C) 2002 Elsevier Science B.V. All rights reserved.