Estimating Expenditure Pattern and Permanent Income Hypothesis: Evidence from Kelantan Malaysia
Ahmad Fahme Mohd Ali
· Naziatul Aziah Mohd Radzi
· Ruzanifah Kosnin
· Suchi Hassan
· Siti Salina Saidin
·Jurnal Ekonomi Malaysia ·2021 ·JEL: B10, D15, D31, E21
The purpose of this paper is to investigate the consumption function among households in Kelantan Malaysia based on the Permanent Income Hypothesis (PIH). This study used secondary data obtained from annual reports, as well as from published and non-published data between 2000 and 2016. The ARDL bound testing approach to deal with cointegration was applied to estimate the long run correlation between the variables. Meanwhile, the error correction method (ECM) was used to determine any short run correlation. This study found a large disparity between the elasticity to consume from current income and the elasticity to consume from permanent income among households in Kelantan. Therefore, it can be concluded that in the case of Kelantan, the PIH is valid.
The Rising Cost of Living in Malaysia: A 6low +RXVHhROG ,ncome *rowth or ,ncreasing 6tandard of Living
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.