Marginal propensity to consume: An application to small farmers of Punjab [Pakistan]
2005
Javed, M.S. (University of Agriculture, Faisalabad (Pakistan). Dept. of Agricultural Economics) | Hussan, S. (University of Agriculture, Faisalabad (Pakistan). Dept. of Agricultural Economics) | Salik, K.M.
The marginal propensity to consume (MPC) of small farm households of Punjab for the period 1980-81 to 1991-92 was estimated. Three consumption models (i.e. partial adjustment, relative income and permanent income models of consumption) were used to specify consumption functions. The models were estimated using disposable household income as a measure of consumption. The models estimates indicated that household consumption responded little to change in income particularly in the short run. The results of relative income model explained consumption better than the other two models. Estimated short run and long run MPC ranged from 0.205 to 0.313 and 0.485 to 0.630, respectively.
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