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An alternative semiparametric estimate of the base-independence equivalence scale: an application to US consumer expenditure survey data

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This study proposes a semiparametric estimate and a test for base-independence equivalence scale. Our semiparametric approach is based on nondensity weighted loss function in contrast to Pendakur's (1999) density weighted loss function. Simulation results indicate that our specification tends to produce a smaller bias in estimating the equivalence scale and thus a more reliable test for base-independence hypothesis. We also provide an application using US Consumer Expenditure Survey data.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840600606294

Affiliations: 1: Korea Institute for Industrial Economics and Trade, Seoul, Korea 2: Department of Economics, Kyung Hee University, Seoul, 130-701, Korea

Publication date: June 1, 2007

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