Abstract:
Empirical analysis of South African indirect tax policy reform and the welfare consequences of such reform
has been limited by a lack of reliable consumer demand system estimations. One reason for potentially
unreliable demand estimations is not using actual price data in estimation. In this paper, the results of a
nutritional goods demand system estimation and a complete demand system estimation are reported. Both
systems were estimated with the use of the quadratic almost ideal demand system (QUAIDS) model
incorporating demographic variables and using actual price and expenditure data. Subsequent to
estimations, expenditure, own and cross-price elasticities of demand were calculated for both demand
systems. The coefficients estimated provided largely statistical significant results and all elasticities
calculated seem plausible in sign and magnitude.
