We propose a test which could be widely applied to determine to adequacy of model which approximate unknown functional forms. As an illustration, the translog system of budget-share equations is rejected as an approximate specification using Christensen, Jorgenson and Lau's (1975) data.

This paper assesses the importance of exact aggregation restrictions in the context of Jorgenson, Lau and Stoker's (1982) model of aggregate consumer behaviour, and analyzes demographic variables. We find the exact aggregation restrictions are strongly rejected by the data, and stratification of...