Evaluation of the Empirical Performance of Two-Stage Budgeting AIDS, QUAIDS and Rotterdam Models Based on Weak Separability
AbstractMicrosimulation models for indirect taxation require detailed underlying demand systems, in order to be policy relevant. A possible solution for the econometric problem (lack of necessary degrees of freedom) is the separability concept and the closely related notion of two-stage budgeting. In this paper, weak separability is applied on the Almost Ideal Demand System (AIDS), its quadratic extension QUAIDS and the Rotterdam model. These two-stage budgeting demand systems were estimated on Belgian time series data and were evaluated by means of a comparison of their elasticities (both partial and total), goodness-of-fit measures and their forecasting accuracy. Though the rank three QUAIDS model does not dominate the others in every respect (at least for time series data), it has nice theoretical properties which can on their own be a justification for the use of the system.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces9807.
Date of creation: Apr 1998
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Other versions of this item:
- André Decoster & Frederic Vermeulen, 1998. "Evaluation of the empirical performance of two-stage budgeting AIDS, QUAIDS and Rotterdam models based on weak separability," Public Economics Working Paper Series ces9807, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
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- Luc Savard, 2010. "Using an Almost Ideal Demand System in a Macro-Micro Modelling Context to Analyse Poverty and Inequalities," Cahiers de recherche 10-04, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
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- Luc Savard, 2004. "Un système de demandes AIDS dans un contexte EGC microsimulation pour l'analyse de pauvreté et des inégalités," Cahiers de recherche 04-10, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
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