[R] linear expenditure model

Arne Henningsen arne.henningsen at googlemail.com
Fri Oct 10 13:11:43 CEST 2008

Hi Marie!

On Friday 10 October 2008 12:40:23, Marie Vandresse wrote:
> I would like to estimate a linear expendire with Systemfit package.
> (method: "SUR")

If I remember correctly, the "linear expenditure system" (LES) is linear in 
income but non-linear in the parameters. Hence, you have to estimate a system 
of non-linear equations. Unfortunately, the nlsystemfit() function in the 
systemfit package that estimates systems of non-linear equations is still 
under development and has convergence problems rather often. Since the 
systemfit() function in the systemfit package that estimates systems of 
linear equations is very reliable [1], I suggest that you choose a demand 
system that is linear in parameters (e.g. the Almost Ideal Demand System, 

[1] http://www.jstatsoft.org/v23/i04

> As someone could show me how to define the equations?

If you use the aidsEst() function in the micEcon package [2], you don't have 
to specify the equations of the Almost Ideal Demand System yourself.

[2] http://www.micEcon.org

Best wishes,

Arne Henningsen

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