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Separable Almost Ideal Demand System, A

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  • Moro, D.
  • Moschini, GianCarlo

Abstract

The necessary and sufficient conditions for direct weak separability are used to derive restrictions on the parameters of the Almost Ideal (AI) demand system, yielding a systematic way of restricting the parameter space that may be useful for estimating large demand systems. The proposed method is illustrated with an application to Canadian demand, with emphasis on root consumption. A 15-good, complete AI demand system subject to nonlinear separability restrictions was estimated by using an efficient minimum distance procedure. The results provide support for a parsimonious separable structure, and show that estimated food demands are inelastic with respect to both own price and income, and that substitution possibilities between foods are limited.

Suggested Citation

  • Moro, D. & Moschini, GianCarlo, 1996. "Separable Almost Ideal Demand System, A," Staff General Research Papers Archive 5255, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:5255
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    Cited by:

    1. Smed, Sinne & Jensen, Jorgen Dejgaard & Denver, Sigrid, 2005. "Differentiated Food Taxes as a Tool in Health and Nutrition Policy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24579, European Association of Agricultural Economists.
    2. Smed, Sinne & Jensen, Jorgen D. & Denver, Sigrid, 2007. "Socio-economic characteristics and the effect of taxation as a health policy instrument," Food Policy, Elsevier, vol. 32(5-6), pages 624-639.
    3. Diotallevi, Francesco & Stasi, Antonio, 2010. "La domanda di olio extra-vergine di oliva nel Sud Italia.Quali le migliori strategie:brand leadership, private label o piccoli produttori? [The extra-virgin olive oil demand in South Italia.Whic ar," MPRA Paper 40480, University Library of Munich, Germany.

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