Premium
On Price Indices in the Almost Ideal Demand System
Author(s) -
Asche Frank,
Wessells Cathy R.
Publication year - 1997
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1244275
Subject(s) - normalization (sociology) , almost ideal demand system , ideal point , ideal (ethics) , economics , point (geometry) , econometrics , mathematical economics , mathematics , microeconomics , philosophy , sociology , geometry , epistemology , production (economics) , anthropology
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.