THE SEMIFLEXIBLE ALMOST IDEAL DEMAND SYSTEM

The concept of a semiflexible functional form is applied to the Almost Ideal (AI) demand system. This yields a demand model that is more par simonious than standard ones while preserving a degree of flexibility, that satisfies the curvature property of concavity of the underlying expenditure function (at least locally), and that preserves the desira ble properties of the Al model (aggregation across consumers and nonli nearity of the Engel curves). The model is illustrated with an applica tion to a relatively large demand system emphasizing food consumption. (C) 1998 Elsevier Science B.V. All rights reserved.