Notes on Displaced CES Functional Forms
Abstract
This document shows how to add another parameter to a Constant Elasticity of Substitution (CES) utility function, derive demand functions, and solve for indirect utility and expenditure functions for the evaluation of money metric utility welfare changes from a price or tax change. It also shows how to calibrate the model, by solving backwards for the parameters that must have existed to generate the observed data.
Suggested Citation
Don Fullerton. 1989. "Notes on Displaced CES Functional Forms" University of Virginia
Available at: http://works.bepress.com/don_fullerton/39
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