Trindade, Vitor; Dalgin, Muhammed; Mitra, Devashish - Economics Department, University of Missouri - 2006
We construct the first direct classification of goods as luxuries or necessities that is compatible with international … luxuries versus necessities. We interpret this result with the aid of a model in which preferences are nonhomothetic, thus … strongly borne out by the results: imports of luxuries increase with importing countrys inequality, and imports of necessities …