Escaping Satiation Dynamics: Some Evidence from British Household Data

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Author(s)
Chai, Andreas
Moneta, Alessio
Griffith University Author(s)
Year published
2014
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Show full item recordAbstract
The tendency of sectoral demand to satiate has long been argued to be a key driver of the structural change in an economy (Pasinetti 1981; Saviotti 2001). This literature raises the question as to what extent cross-sectional patterns of household expenditure can be used to make inferences about how the demand for goods and services will grow over time. Moreover, if indeed satiation does take place, then firms and entrepreneurs could react to this situation by innovating goods and services in order to overcome stagnation in demand growth (Witt 2001). We empirically investigate this 'satiation-escape' hypothesis by examining ...
View more >The tendency of sectoral demand to satiate has long been argued to be a key driver of the structural change in an economy (Pasinetti 1981; Saviotti 2001). This literature raises the question as to what extent cross-sectional patterns of household expenditure can be used to make inferences about how the demand for goods and services will grow over time. Moreover, if indeed satiation does take place, then firms and entrepreneurs could react to this situation by innovating goods and services in order to overcome stagnation in demand growth (Witt 2001). We empirically investigate this 'satiation-escape' hypothesis by examining the inter-temporal dynamics of Engel curves and their derivatives, which reflect how household spending on a good changes with income. Taking into account changes in the price level, we investigate whether Engel curves that exhibit cross-section satiation tend to exhibit over time an upwards shift in the satiation level jointly with a shift in position and shape. Evidence suggests that this is actually the case.
View less >
View more >The tendency of sectoral demand to satiate has long been argued to be a key driver of the structural change in an economy (Pasinetti 1981; Saviotti 2001). This literature raises the question as to what extent cross-sectional patterns of household expenditure can be used to make inferences about how the demand for goods and services will grow over time. Moreover, if indeed satiation does take place, then firms and entrepreneurs could react to this situation by innovating goods and services in order to overcome stagnation in demand growth (Witt 2001). We empirically investigate this 'satiation-escape' hypothesis by examining the inter-temporal dynamics of Engel curves and their derivatives, which reflect how household spending on a good changes with income. Taking into account changes in the price level, we investigate whether Engel curves that exhibit cross-section satiation tend to exhibit over time an upwards shift in the satiation level jointly with a shift in position and shape. Evidence suggests that this is actually the case.
View less >
Journal Title
Jahrbücher für Nationalökonomie und Statistik
Volume
234
Issue
2+3
Publisher URI
Copyright Statement
© 2014 Lucius und Lucius Verlagsgesellschaft mbH. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Subject
Economics not elsewhere classified
Economics