Static and demand functions: An application to the Canadian data

Static and demand systems were reviewed and estimated using annual Canadian data for the period 1947-72. The review focuses on the relationship among the static and dynamic demand systems, persistence in consumption behavior and more general aspects of intertemporal consumption patterns. The empirical results provide additional insights into Canadian consumer expenditure bahavior itself, an applied context for evalutaing the different demand systems, and a comparison of static and dynamic forms of demand systems. The structural estimates obtained are generally consistent with a priori expections. Thus, they reinforce the confidence that can be placed in estimates of demand elasticities and their use in policy analysis. Alternative levels of aggregation, comparisons with other demand systems reaults for Canada and the United States, estimates from models with more flexible error assumptions and predictive performance are used in evaluating the results.