Abstract--In this paper, a new model-based algorithm for optimizing the MPEG-Advanced Audio Coder (AAC) in MS-stereo mode is presented. This algorithm is an extension to stereo signals of prior work on a statistical model of quantization noise. Traditionally, MS-stereo coding approaches replace the Left (L) and Right (R) channels by the Middle (M) and Sides (S) channels, each channel being independently processed, almost like a monophonic signal. In contrast, our method proposes a global approach for coding both channels in the same process. A model for the quantization error allows us to tune the quantizers on channels M and S with respect to a distortion constraint on the reconstructed channels L and R as they will appear in the decoder. This approach leads to a more efficient perceptual noise-shaping and avoids using complex psychoacoustic models built on the M and S channels. Furthermore, it provides a straightforward scheme to choose between LR and MS modes in each subband for eac...