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Demand system estimation. Let Y denote total expenditure on consumer durables, nondurables, and services and Ed, En, and Es are the expenditures on the three categories. As defined, Y = Ed + En + Es. Now, consider the expenditure system Prove that if all equations are estimated by ordinary least squares, then the sum of the expenditure coefficients will be 1 and the four other column sums in the preceding model will bezero. |
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