Deflating Statistical Series: An Example Using Aggregate U.S. Demand for Textile End-Use Categories

Analysts frequently adjust price, income, or other data to eliminate the influence of inflation or difference in size The authors of this article examine economic and statistical reasons for deflating time-series and cross-sectional data prior to estimating demand relations Signs and magnitudes of regression coefficients change when aggregate demand equations for textiles and estimated from time-series data Questions of hetero skedasticity, multicollinearity, and homogeneity are addressed The demand equations are disaggregated by end use category - apparel, household, and industrial demand