Demand Systems from Cross Section Data: An Experiment for Indonesia

Tesfaye Teklu, Stanley R. Johnson
June 1987  [87-WP 24]

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Teklu, T. and S.R. Johnson. 1987. "Demand Systems from Cross Section Data: An Experiment for Indonesia." Working paper 87-WP 24. Center for Agricultural and Rural Development, Iowa State University.


A linear version of the Almost Ideal Demand System and the Multinomial Linear Logit Model are used to estimate Indonesia's food demand system in order to support policy analysis for Indonesia's five-year plan. The resulting estimated elasticities vary significantly across economic levels. These elasticities are evaluated and compared with other studies in Indonesian and other selected Asian countries. Policy reforms targeted to changing food prices will cause predictable results.