Beghin, John C.; Bureau, Jean-Christophe; Drogu?, Sophie

Applied Economics Vol. 8 no. 36 (May 1 2004): 839-847. (Originally published as CARD Working Paper #03-WP 324)

We introduce an easily implemented and flexible calibration technique for partial demand systems, combining recent developments in incomplete demand systems and a set of restrictions conditioned on the available elasticity estimates. The technique accommodates various degrees of knowledge on cross-price elasticities, satisfies curvature restrictions, and allows the recovery of an exact welfare measure for policy analysis. The technique is illustrated with a partial demand system for food consumption in Korea for different states of knowledge on cross-price effects. The consumer welfare impact of food and agricultural trade liberalization is measured. Keywords: calibration, exact welfare measure, incomplete demand systems, policy analysis.