Evaluating the Linearized Almost Ideal Demand System

Adolf Buse ()

American Journal of Agricultural Economics, 1994, vol. 76, issue 4, 781-793

Abstract: Linearizing the Almost Ideal Demand System (LAIDS) by recourse to the Stone share weighted price index is common practice. Two issues are addressed here. First, scrutiny of the errors-in-variables implications of the linearization reveals that, not only is the SUR estimator inconsistent, but a consistent IV estimator cannot be constructed. Second, some alternatives to the Green-Alston elasticities specifically designed for the LAIDS model are developed, but neither these nor the Green-Alston elasticities are found to have any advantages over the conventional elasticity formulae. Some errors in the Green-Alston (1990) paper are corrected. The inconsistency and elasticity issues are documented by a Monte Carlo investigation.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (102)

Downloads: (external link)
http://hdl.handle.net/10.2307/1243739 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:76:y:1994:i:4:p:781-793.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().