Consumers' demand in the long run: some evidence from UK data

Abstract

A system of demand functions is estimated with quarterly UK data using recently developed techniques for the estimation and testing of cointegrated systems. These fully modified methods aim to remove nuisance parameters from the limiting distributions which arise with non-stationary data, so that conventional inferntial procedures can be applied. It is found that the homogeneity and symmetry restrictions of consumer theory appear to be reasonable descriptions of aggregate behaviour.