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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
You can always find the topics here!Topics: Price indices, Demand, Price elasticity, Elasticity of demand, Evaluation points, Logarithms, Data normalization, Financial budgets, Linear approximation, Elastic systems
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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.
American Journal of Agricultural Economics © 1997 Agricultural & Applied Economics Association