Calibrating the Modified An Implicitly Directly Additive Demand System (MAIDADS) for Applied Economic Modeling

The main objective of this paper is to make a good use of the recent study that modified the AIDADS (An Implicitly Directly Additive Demand System). The modified AIDADS (MAIDADS) is able to capture varying consumer behaviors across different expenditure levels and also allows minimum consumption quantities to change as utility varies. These features would attract attention from researchers conducting applied economic analysis which involves consumers at wide range of expenditure levels; consumers at developing and developed countries, households at different income levels, and evolution of expenditure patterns over the long-run simulated often under CGE models, e.g. for 50 or 100 years from the benchmark year. The parameters in the MAIDADS are estimated with the 2005 International Comparison Program dataset, and we obtained elasticities as well as the minimum consumption quantities for 147 countries and 12 expenditure categories. With these estimation results, the MAIDADS can be incorporated into applied economic models.