Comparison of Quadratic Expenditure System and Almost Ideal Demand System Based on Empirical Data

Researchers prefer to use a demand system that best fits their data. This paper examines a nonnested test of comparison between the quadratic expenditure system (QES) and the almost ideal demand system (AIDS). We determine which model is more suitable by analyzing the value and the significance of the common coefficient of the two models. We also show that the compound model can be used as a demand system. Using a specific database, we show that the AIDS is a more suitable model than the QES. The empirical results are useful for those interested in food demand structure in China.