Predicting Expenditure Patterns across the Income Spectrum using International Cross-Section Estimates

There is a long and distinguished literature involving demand analysis using international cross-section data. Such models are widely used for predicting national per capita consumption. However, there is nothing in this literature testing the performance of estimated models in predicting demands across the income spectrum within a single country. This paper fills the gap. We estimate an AIDADS model using cross-section international per capita data, and find that it does well in predicting food demand across the income distribution within Bangladesh. This suggests that there may be considerable value in using international cross-section analysis to study poverty and distributional impacts of policies.