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On Price Indices in the Almost Ideal Demand System

Frank Asche and Cathy R. Wessells
American Journal of Agricultural Economics
Vol. 79, No. 4 (Nov., 1997), pp. 1182-1185
Stable URL: http://www.jstor.org/stable/1244275
Page Count: 4
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On Price Indices in the Almost Ideal Demand System
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Abstract

A number of papers have discussed the relationship between the Almost Ideal Demand System (AIDS) and its linear approximation (LA/AIDS). In this paper, it is shown that if the prices in the system are normalized to one, the AIDS and LA/AIDS representations are identical at the point of normalization. Also, at the point of normalization, the expressions for price and expenditure elasticities from both systems are identical.

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