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Comparison of Quadratic Expenditure System and Almost Ideal Demand System Based on Empirical Data

Author

Listed:
  • Ani L. Katchova
  • Wen S. Chern

    (University of Illinois at Urbana-Champaign and the Ohio State University)

Abstract

Researchers prefer to use a demand system that best fits their data. This paper examines a nonnested test of comparison between the quadratic expenditure system (QES) and the almost ideal demand system (AIDS). We determine which model is more suitable by analyzing the value and the significance of the common coefficient of the two models. We also show that the compound model can be used as a demand system. Using a specific database, we show that the AIDS is a more suitable model than the QES. The empirical results are useful for those interested in food demand structure in China.

Suggested Citation

  • Ani L. Katchova & Wen S. Chern, 2004. "Comparison of Quadratic Expenditure System and Almost Ideal Demand System Based on Empirical Data," The International Journal of Applied Economics, Department of General Business, Southeastern Louisiana University, vol. 1(1), pages 55-64, September.
    • Handle: RePEc:ija:ancoec:v:1:y:2004:i:1:p:1-58
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    More about this item

    Keywords

    Demand system; AIDS; QES; nonnested tests; China;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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