An Empirical Analysis of Cultural Expenditures Using Dynamic Almost Ideal Demand Systems

Abstract

This study applies dynamic almost ideal (AI) demand systems to analyze the effects of household expenditures on culture in Japan and to calculate the elasticities of cultural demand. After a preliminary investigation by implementing tests of unit roots and cointegration, an AI demand system with error correction terms is estimated for monthly household cultural and recreational expenditures. These expenditures include admission fees for movies and plays, cultural establishments, amusement parks, and other activities. Restriction of homogeneity and symmetry of parameters in the AI demand system are also tested. Using the estimated parameters in the system, both long- and short-term price and income elasticities for cultural expenditures are calculated, which provides information on the characteristics of cultural expenditures in Japan.