13 votes
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In simple terms: what are the implications of homothetic and nonhomothetic consumer preferences?

From a mathematical point of view, if the function $f(x,y)$ is homogeneous (of any degree), and $g()$ is a function whose first derivative is everywhere non-zero, then the function $$H(x, y) = g[f(x,...
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7 votes

Why do so many models assume homothetic preferences?

Let me answer the question by following @HRSE's explanation and recommending a good reading. Eaton and Kortum (Ecta, 2002) use homothetic preferences, a convenient assumption to get a tractable ...
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  • 6,662
7 votes

Why do so many models assume homothetic preferences?

Here a short answer: Homothetic, identical preferences have the modelling advantage that the distribution of income across individuals does not matter for aggregate demand. That is, if you want to ...
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4 votes
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What are good dataset alternatives to estimate value functions?

As I understand it, you're trying to estimate a demand system for different goods. Have a look at Aguiar and Bils (forthcoming AER), who use the consumption expenditure survey to do exactly that. The ...
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4 votes
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Dif-in-Dif aggregating or not?

Yes, you can run diff-in-diff with aggreggate treatment in this case. Yes, standard errors should be clustered at the treatment (here=state) level. No, the number of clusters is not an issue, as the ...
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  • 5,489
3 votes

Distribution of firm sizes and firm age

Compustat Annual is used in Gabaix and Landier (2008). A famous stylized fact is the power-law distribution (by Gabaix again) of firm sizes. But power-law claims have been criticized as resulting from ...
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3 votes
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Using a Logit model to predict unknown outcome

If I understood you correctly, $\Lambda(x_i'\hat\beta)$, where $\Lambda(x) = e^x / (1+e^x)$. You can use predict in both R and Stata. Try in Stata: ...
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  • 2,039
2 votes

Longitudinal microdata on house migration patterns

The US Panel Survey of Income Dynamics (PSID) has this data, at least if pre-tax income will do. We use the 1999-2009 Panel Survey of Income Dynamics to estimate household move probabilities as ...
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2 votes
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How come the average studio rent in Vietnam is bigger than the average salary?

The rent figure in the question relates to the centre of Ho Chi Minh City and it is a fallacy to infer that it is typical of the whole of Vietnam. There is a body of theory going back to von Thunen ...
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  • 7,290
2 votes

Why is imputed rental income for owner-occupied housing included in the measurement of household income?

The household owns an asset, the house, from which an income can be derived. The household could decide to let the house and with the income rent another house. Alternatively, the household could ...
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  • 761
1 vote

Companies database with strange negative values, are they reasonable from an economic point of view?

Sales, liabilities, total assets and capital expenditures should be logically non-negative. You should however consult metadata/manual for the dataset. Perhaps negative sales record situation where ...
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  • 43.6k
1 vote

Can I treat pooled cross-section as panel data and do regression analysis?

Yes, you can consider this as panel data, but the key is to understanding why, as this affects how you explain and interpret your panel regression. In treating each cohort as the same unit over time, ...
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  • 1,200
1 vote

Selecting the best utility function for households

According to Wikipedia and this notes from HKU, the indirect utility function is part of consumer theory, and is defined as the maximum utility that can be attained given a consumers' money income, ...
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1 vote

Where can I find data related to foreign remittances?

In the World Bank website you can find data on remittances such as Annual and Monthly Remittance Flows to Selected Countries, Bilateral Remittances Matrices, and Household survey data on migration ...
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  • 6,662
1 vote

How come the average studio rent in Vietnam is bigger than the average salary?

One reason could be price discrimination. For instance, the same apartment is not rented the same price for locals vs (rich) foreigners. Other potential reasons: the apartment could also be ...
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  • 6,662
1 vote
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Causes of interlocking directorship connections between firms

I've heard of this phenomenon but not for the reasons you suggest: The largest corporations tend to have the most interlocks (Table 4). This may occur because the directors of the largest ...
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