Project Agreement for L4863-CN Conformed
Png,Margaret
This paper is one part of a broad research program in the area of consumption and economic development. It presents estimates of expenditure and price elasticities for eight broad categories of consumption goods in 19 countries, covering a wide spectrum of GNP per capita and using short time series for each country. The model chosen for implementation is the Linear Expenditure System (LES). The attempt of estimation uses a uniform complete demand system approach for economies with very different GNP per capita. By definition, the budget constraint is satisfied, and all expenditure and price effects are measured. International comparisons, on the basis of LES estimates, in search of systematic variations in expenditure patterns as per capita output changes are reported. The paper addresses the question of the share of consumption in personal disposable income, to see whether one more parameter is sufficient to represent the consumption-saving decision by the household sector. For 16 countries an estimate of the marginal propensity to consume is obtained using LES estimates.
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