Estimating and testing an almost ideal demand system

Since the introduction of the Almost Ideal Demand System (AIDS) in the seminal paper by Deaton and Muellbauer (1980), few applications of their model have been reported. This may be due partly to the relatively complicated structure of the model and the associated estimation problems but it may also be due to the fact that the simplified versions of AIDS recommended by Deaton and Muellbauer have been used instead. More specifically, when it is possible to approximate a highly nonlinear price index (deflator) by a much simpler index such as the Stone (1953) index and hence reduce the level of computational difficulty to that of, say, the Rotterdam model, it is not surprising that researchers choose not to employ the AIDS model but use instead a model based on the simpler index.