Record Details

AN EMPIRICAL ANALYSIS OF CONSUMPTION EXPENDITURE IN CHINA:A CASE STUDY OF CHANGCHUN CITY

International Journal of Business and Society

View Archive Info
 
 
Field Value
 
Title AN EMPIRICAL ANALYSIS OF CONSUMPTION EXPENDITURE IN CHINA:A CASE STUDY OF CHANGCHUN CITY
 
Creator Lu, Wenliang
Lau, Sim-Yee
 
Description This paper conducted a case study on Changchun—a city with 7.6 million populations located in the northeastern part of China—that analyzes consumer behavior in China. The empirical analysis is based on the AIDS model propounded by Deaton and Muellbauer (1980). The data used in this econometric analysis is a time series cross sectional panel data from 300-household survey responses collected from January 2009 to December 2011. The empirical results show that “food” and “education, culture and recreation” are necessity goods for the people in Changchun. These two items cover 44% of total expenditure share in the data set. At the same time, these two items are Giffen goods because their expenditure share increases even with rise in their prices. The findings suggest that “housing” is a luxury good but it is also a Giffen good. From this point, it is plausible to argue that the growth of real income across China in general and in Changchun in particular has been lagging behind the rise in prices of “housing”. Additionally the estimated own-price elasticity of demand in “education, culture and recreation” suggests that people in Changchun will spend more on these items in order to acquire a higher quality of education despite price increases. The estimated compensated cross-price elasticity of demand of various pairs of goods like “food and housing,” “food and education, culture and recreation,” “clothing and housing,” “clothing and medical” and others indicate that the theoretical assumption of a diminishing MRS does not hold for our data set. The analytical results show that people’s demand in “medical” is not being influenced by its price and people’s disposable income.Keywords: AIDS; Income Elasticity Of Demand; Cross-Price Elasticity Of Demand; Compensated Cross-Price Elasticity Of Demand; Net Substitute Goods; Net Complement Goods.
 
Publisher Faculty of Economics and Business, UNIMAS
 
Date 2017-11-30
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://publisher.unimas.my/ojs/index.php/IJBS/article/view/578
 
Source International Journal of Business and Society; Vol 16 No 3 (2015): International Journal of Business and Society
1511-6670
 
Language eng
 
Relation http://publisher.unimas.my/ojs/index.php/IJBS/article/view/578/520
 
Rights Copyright (c) 2017 International Journal of Business and Society