GORMAN POLAR FORMS AND THE S-BRANCH UTILITY TREE

Abstract

With the advent of flexible functional forms and their superior econometric performance, the use of closed form utility functions is now limited co general equilibrium or simulation models. This is because they automatically satisfy the axioms of consumer behaviour and thus guarantee that a correctly characterised numerical solution will represent a utility maximum. In this context the Gorman Polar Form proposed by Brown and Heien in their S-Branch paper (1972) is re-examined and it is argued that a reformulation enhances its use considerably .