Parameters estimation according to Engel's Law in Excel

Abstract

Engel's Laws have been frequently used in economic analysis. In this paper, the concrete relations in Croatian economy are studied according to basic postulates of Engel curve. The parameters of relevant model are estimated by respecting wages movement and luxury consumption. Beside standard method, parameters estimation has also been done by Monte Carlo simulation, which enables the basic assumptions to be fulfilled. By using such multi-objective approach, the obtained results have been presented, interpreted and comparatively analysed. All calculations are accomplished very simply in Excel. This user-friendly approach will help many users to easily solve similar complex statistical and mathematical calculations, which is useful and important for students of economic sciences in quantitative analysis.