Microeconomics

Mohd Aqmin Abdul Wahab · Hazrul Izuan Shahiri · Mustazar Mansur · Mohd Azlan Shah Zaidi ·Jurnal Ekonomi Malaysia ·2018

This paper looks at the causes of increasing cost of living by studying two (2) main factors; frstly, the slow growth in income as compared to infation, and secondly the unproportional increase in standard of living as compared to income. For the frst factor, a time series regression model was constructred using the data from Household Income Survey report (various years) to compare the fuctutation in income against the infation rate year-on-year. For the second factor, we studied the expenditure elasticity of income for the household. A log-log linear regression model was developed taking into consideration the three (3) main groups of goods that household buys: Food, Transportation and Housing. We have studied the elasticities across income strata (B40, M40, T20) and location (Rural vs Urban) to observe the changes in elasticity with respect to those variables. The result of this study points that income growth has indeed surpasses infation rate from year to year, however the standard of living is increasing at a comparatively fast rate, as evidenced by high expenditure elasticities for several types of goods for B40s and M40s. This suggests that the standard of living, or living styles are the dominant factor that contributes to the problems of increasing cost of living.

Loo Sze Ying · Mukaramah Harun ·Jurnal Ekonomi Malaysia ·2019

This paper estimated the reactions of frms and households to the change of government expenditure from fuel subsidies to two alternative fscal regimes, including the expansion of government expenditure on agricultural investment and direct cash transfers. Outcomes brought by the government expenditure changes to outputs of production for frms, together with the household consumption expenditure, were taken into account. This study was carried out by using a Löfgren-based computable general equilibrium (CGE) model. The fndings showed that complete fuel withdrawal was found to have adverse impacts on frms and households. The withdrawal of subsidy brought a lackluster performance in domestic production. Firms that needed large amounts of fuel products to produce outputs were greatly affected. Besides, households of all segments faced large consumption loss. Nevertheless, the resulting adverse impacts on frms and households could be minimized with the implementation of mitigation measures along with the subsidy reform. The additional fund transfer to the agricultural sector had the merits of improving domestic production and minimizing the consumption loss of the population. In contrast, the direct cash transfer benefted the target population -- the mediumand low-income segments in the urban and rural areas.