Chapter 2 The Almost Ideal and Translog Demand Systems

Abstract

This chapter reviews the specification and application of the Deaton and Muellbauer's (1980) almost ideal demand system (AIDS) and the Christensen et al. (1975) translog (TL) demand system. In so doing we examine various refinements to these models, including ways of incorporating demographic effects, methods by which curvature conditions can be imposed, and issues associated with incorporating structural change and seasonal effects. We also review methods for adjusting for autocorrelation in the models' residuals. A set of empirical examples for the AIDS and the log TL version of the translog based on historical meat price and consumption data for the United States are also presented.

Citation

Holt, M.T. and Goodwin, B.K. (2009), "Chapter 2 The Almost Ideal and Translog Demand Systems", Slottje, D.J. (Ed.) Quantifying Consumer Preferences (Contributions to Economic Analysis, Vol. 288), Emerald Group Publishing Limited, Leeds, pp. 37-59. https://doi.org/10.1108/S0573-8555(2009)0000288005