Some Further Discussion on the Price Index for The Almost Ideal Demand System: A Chain Price Index Approach

Mark G. Brown and Jonq-Ying Lee

No 121588, Research papers from Florida Department of Citrus

Abstract: The issue of identification of the parameter α0 in the price index of the Almost Ideal Demand System (AIDS) is examined. In nearly all empirical studies, the model’s likelihood function has been extremely flat in α0, and this parameter has not been able to be estimated. Assumed values are often used. In this paper, an AIDS-like model is developed with an easy- to-calculate chain-price index that replaces the price index in the original AIDS. The model stands by itself with respect to consumer demand theory and flexibility. An empirical analysis of beverage demands gives merit to the specification.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 26
Date: 2011-07
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/121588/files/RP-2011-3.pdf (application/pdf)

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:ags:fdcrrp:121588

DOI: 10.22004/ag.econ.121588

Access Statistics for this paper

More papers in Research papers from Florida Department of Citrus
Bibliographic data for series maintained by AgEcon Search ().