Flexible functional forms of indirect utility and expenditure functions are frequently used in approximating the behavior of utility maximizing consumers to arrive at demand systems that can be easily estimated. A common finding in time series estimations of the Almost Ideal Demand System is...

This paper studies the error in forecasting a dynamic time series with a deterministic component. We show that when the data are strongly serially correlated, forecasts based on a model which detrends the data before estimating the dynamic parameters are much less precise than those based on an...