Often, researchers are interested in estimating demand for a basket of goods. The new demandsys command provides extensive tools for computing demand and measuring how sensitive demand for goods is to price and expenditure changes by calculating their corresponding elasticities.
We can use demandsys to fit eight different demand system models:
o Cobb–Douglas
o Linear expenditure system
o Basic translog
o Generalized translog
o Almost ideal demand
o Generalized almost ideal
o Quadratic almost ideal
o Generalized quadratic almost ideal
With the estat elasticities command, we can estimate various elasticities—expenditure elasticities, uncompensated own-price and cross-price elasticities, and compensated own-price and cross-price elasticities—to explore how sensitive demand is to changes in prices and expenditures.