In this chapter, we analyse the consumption patterns of consumers in 44 countries in relation to the four commodity groups, namely, food, tobacco, alcohol and soft drinks. In Section 8.1, we present the details of the data source and its characteristics and a summary of the data in the form of Divisia indices in Section 8.2. In Section 8.3, we present the estimation results based on a double-log demand system. In Section 8.4, we estimate the demand systems introduced in Chapters 6 and 7, and test demand theory hypotheses such as demand homogeneity and Slutsky symmetry. We also test the assumption of preference independence. In Sections 8.5 and 8.6, we present the final estimates and the implied income and price elasticities of the four commodity groups and the concluding comments. The results presented in this chapter are obtained using the Demand Analysis Package 2000 (DAP2000, Yang et al, 2003) and DEMMOD (Barten et al9 1989).______

8.1 Data Source

Choosing M, =1 for some year t in equation (1.1), a F can be interpreted as the budget share of food during that year t. The coefficient (3p gives 100 times the change in the budget share of food resulting from a 1 percent increase in income. Model (1.1) is also applicable across countries, where we replace the subscript t by the country subscript c.