JEL classification

Specification and estimation of a dynamic consumption allocation model [24/12/2012]

 This paper presents an allocation model of Belgian household consumption over 23 categories of goods and services. We have formulated and estimated an extension of the classic Almost Ideal Demand System. The original model has been modified by introducing a dynamic adjustment mechanism and by the inclusion of demographic variables. These capture shifts in consumption patterns related to the changing age composition of the population. The paper is an extension of earlier work (Willemé, 2008), in particular with respect to the number and composition of the consumption categories considered.