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The Inverse Almost Ideal Demand System

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  • Eales, James S.
  • Unnevehr, Laurian J.

Abstract

A new demand system, related to the Almost Ideal Demand System (AIDS) of Deaton and Muellbauer, is developed and illustrated. This Inverse AIDS (IAIDS) retains all of the desirable theoretical properties of the AIDS model with the exception of, consistent aggregation. An empirical issue is whether a linear approximation will work as well for the IAIDS as it has for the AIDS model, since quantities are not as highly correlated as prices. An application to US meat demand demonstrates that the linear approximation of the IAIDS is excellent, which enhances the ease and range of application.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Eales, James S. & Unnevehr, Laurian J., 1991. "The Inverse Almost Ideal Demand System," Staff Paper Series 232516, University of Alberta, Department of Resource Economics and Environmental Sociology.
  • Handle: RePEc:ags:ualbsp:232516
    DOI: 10.22004/ag.econ.232516
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    File URL: http://ageconsearch.umn.edu/record/232516/files/ualberta-staffpapers-91-12.pdf
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    References listed on IDEAS

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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. Walter N. Thurman, 1987. "The Poultry Market: Demand Stability and Industry Structure," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(1), pages 30-37.
    3. Kim Haden, 1990. "The Demand for Cigarettes in Japan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 446-450.
    4. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-999, September.
    5. Kuo S. Huang, 1990. "An Inverse Demand System for U.S. Composite Foods: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(1), pages 239-239.
    6. Robert G. Chambers & Kenneth E. McConnell, 1983. "Decomposition and Additivity in Price-Dependent Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(3), pages 596-602.
    7. Michael K. Wohlgenant, 1989. "Demand for Farm Output in a Complete System of Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 241-252.
    8. James P. Houck, 1965. "The Relationship of Direct Price Flexibilities to Direct Price Elasticities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(3), pages 789-792.
    9. White, Kenneth J, 1978. "A General Computer Program for Econometric Methods-Shazam," Econometrica, Econometric Society, vol. 46(1), pages 239-240, January.
    10. John Muellbauer, 1975. "Aggregation, Income Distribution and Consumer Demand," Review of Economic Studies, Oxford University Press, vol. 42(4), pages 525-543.
    11. Dale W. Jorgenson & Lawrence J. Lau, 1975. "The Structure of Consumer Preferences," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 1, pages 49-101, National Bureau of Economic Research, Inc.
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    Keywords

    Demand and Price Analysis;

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