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Measuring An Almost Ideal Demand System With Generalized Flexible Least Squares

  • Poray, Michael C.
  • Foster, Kenneth A.
  • Dorfman, Jeffrey H.

Structural change in meat consumption has been the focus of many researchers during the last two decades. In this paper we develop a dynamic linear Almost Ideal Demand System (AIDS) model from a cost function that allows for time varying parameters. This model is consistent with inertia in the parameters of the cost and indirect utility functions. It allows for persistent preferences which may arise from cultural biases, lifestyles, peer pressure, etc. An empirical application is conducted with US meat consumption and price data using a generalized system of flexible least squares, Generalized Flexible Least Squares (GFLS). GFLS allows parameters to evolve slowly over time through incorporating of penalties in fluctuations. Estimated quarterly elasticities were subjected to additional analysis to determine how highly they were related to the Brown and Schrader Cholesterol Index and relative prices. The combined results support that the movements of elasticities over time are related to both.

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File URL: http://purl.umn.edu/21796
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2000 Annual meeting, July 30-August 2, Tampa, FL with number 21796.

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Date of creation: 2000
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Handle: RePEc:ags:aaea00:21796
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  1. Chalfant, James A & Alston, Julian M, 1988. "Accounting for Changes in Tastes," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 391-410, April.
  2. Russell Davidson & James G. MacKinnon, 1980. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Working Papers 378, Queen's University, Department of Economics.
  3. Tesfatsion, Leigh S. & Veitch, J., 1990. "U.S. Money Demand Instability: A Flexible Least Squares Approach," Staff General Research Papers 11193, Iowa State University, Department of Economics.
  4. Moschini, GianCarlo & Meilke, Karl D., 1984. "Parameter Stability and the U.S. Demand for Beef," Staff General Research Papers 11272, Iowa State University, Department of Economics.
  5. Binswanger, Hans P., 1973. "The Measurement Of Technical Change Biases With Many Factors Of Production," Staff Papers 14205, University of Minnesota, Department of Applied Economics.
  6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  7. Dorfman, Jeffrey H. & Foster, Kenneth A., 1991. "Estimating Productivity Changes With Flexible Coeficients," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
  8. Chalfant, James A, 1987. "A Globally Flexible, Almost Ideal Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 233-42, April.
  9. Kalaba, Robert E. & Tesfatsion, Leigh S., 1989. "Time-Varying Linear Regression Via Flexible Least Squares," Staff General Research Papers 11196, Iowa State University, Department of Economics.
  10. Alston, Julian M. & Chalfant, James A., 1991. "Can We Take The Con Out Of Meat Demand Studies?," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(01), July.
  11. Moschini, GianCarlo, 1991. "Testing for Preference Change in Consumer Demand: An Indirectly Separable, Semiparametric Model," Staff General Research Papers 11261, Iowa State University, Department of Economics.
  12. Moschini, GianCarlo & Meilke, Karl D., 1989. "Modeling the Pattern of Structural Change in U.S. Meat Demand," Staff General Research Papers 11266, Iowa State University, Department of Economics.
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