<p>Since the late 1990s, demand for services has been growing rapidly in Japanese households, whereas demand for durable goods has been declining across all age groups. This trend suggests a shift in consumer preference towards services over durable goods. This study examines the weak separability of non-durable goods and services from durable goods and services by utilizing age-group panel data. Additionally, we employed a nonparametric weak separability test with incomplete adjustment developed by Hjertstrand et al. (J Econ Dyn Control 152:1–19, 2023), based on the mixed-integer linear programming approach. Our findings indicate that the weak separability of non-durable goods and services from durable goods is valid. This suggests that the service flows associated with durable goods can be ignored and that expenditures on non-durable goods and services are determined independently of durable goods. In addition, we estimate the demand for non-durable goods and services using the almost ideal demand system model developed by Deaton and Muellbauer (Am Econ Rev 70(3):312–326, 1980) and verify the validity of the model. The results confirm that the estimated own-price elasticity satisfies negativity, as required by demand theory, and that the demand theory’s homogeneity and symmetry restrictions are also valid.</p>

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Testing Weak Separability of Non-durable Goods and Services from Durable Goods and Services in Japanese Household Expenditures

  • Manami Ogura

摘要

Since the late 1990s, demand for services has been growing rapidly in Japanese households, whereas demand for durable goods has been declining across all age groups. This trend suggests a shift in consumer preference towards services over durable goods. This study examines the weak separability of non-durable goods and services from durable goods and services by utilizing age-group panel data. Additionally, we employed a nonparametric weak separability test with incomplete adjustment developed by Hjertstrand et al. (J Econ Dyn Control 152:1–19, 2023), based on the mixed-integer linear programming approach. Our findings indicate that the weak separability of non-durable goods and services from durable goods is valid. This suggests that the service flows associated with durable goods can be ignored and that expenditures on non-durable goods and services are determined independently of durable goods. In addition, we estimate the demand for non-durable goods and services using the almost ideal demand system model developed by Deaton and Muellbauer (Am Econ Rev 70(3):312–326, 1980) and verify the validity of the model. The results confirm that the estimated own-price elasticity satisfies negativity, as required by demand theory, and that the demand theory’s homogeneity and symmetry restrictions are also valid.