Estimation of the Brazilian Consumer Demand System

Abstract

In this study we estimate the Brazilian consumer demand system through family expenditure data, which cover all consumption categories. The model is estimated from family-level expenditures on seven consumption categories, and a new set of regional cost-of-living indexes. The sources for expenditures are the national household expenditure surveys (POFs) conducted in 1987/88 and 1995/96, which collected data from eleven metropolitan areas. To the best of our knowledge this is the first study of this type and extent based on both waves of POF. Corresponding price indexes were constructed from detailed commodity prices, also from each metropolitan area. The salient features of our study are 1) price variations come from both time and regional differences, which allows us to estimate price elasticities with high precision, 2) we have large variations in income (total expenditures), which is rarely available in aggregate data, and 3) we control for time specific factors by exploiting the panel structure of the data set.