ABSTRACT
In Chapter 6, we presented a number of Divisia indexes and several forms of demand equations, which were formulated in infinitesimal changes. However, in practice, data are available only in finite time intervals (monthly, quarterly, yearly etc.). In the first part of this chapter, we discuss various approaches of converting the variables in infinitesimal form to finite-change form and estimating the demand systems. In the second half of the chapter, we consider the testing of the demand theory hypotheses demand homogeneity, Slutsky symmetry and the preference independent utility structure.
