Using an Almost Ideal Demand System in a macro-micro modelling context to analyse poverty and inequalities

Type Journal Article
Title Using an Almost Ideal Demand System in a macro-micro modelling context to analyse poverty and inequalities
Author(s)
Publication (Day/Month/Year) 2010
URL http://www.researchgate.net/profile/Luc_Savard/publication/242716587_Using_an_Almost_Ideal_Demand_Sy​stem_in_a_Macro-Micro_Modelling_Context_to_Analyse_Poverty_and_Inequalities/links/0c96052971de8459ac​000000.pdf
Abstract
In this paper, we explore the contribution of introducing a flexible form for household consumption in a macro-micro modelling context for poverty and income distribution analysis. The almost ideal demand system exhibits interesting features allowing for the introduction of inter-household heterogeneity in a rigorous fashion. In order to illustrate the contribution of the AIDS system in the macro-micro modelling context, we perform a comparative analysis with an equivalent model using a LES demand system and a CGE with representative households including an AIDS. Results show the strong contribution of using an almost ideal demand system in a microsimulation context and its value added versus a linear expenditure system to analyse poverty and income distribution changes following a policy simulation.

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