MAINTAINING AND TESTING SEPARABILITY IN DEMAND SYSTEMS

We derive a general elasticity representation of the necessary and suf ficient conditions for direct weak separability of the utility functio n. Parametric restrictions required to implement the separability cond itions are presented for three common demand systems: the Almost Ideal , Translog, and Rotterdam. Our empirical application uses the Rotterda m model to test a few separable structures within a complete U.S. dema nd system emphasizing food commodities. Results, based on size-correct ed likelihood ratio tests, provide support for commonly used separabil ity assumptions about food and meat demand.