Income Elasticity

This paper uses data from the Kingdom of Saudi Arabia (KSA) to empirically test Wagner's Law in explaining public expenditure growth in association with economic growth; and if this growth enhanced the public welfare. The Kingdom of Saudi Arabia (KSA) has witnessed a marked increase in government expenditure. We use the Engle and Granger (E-G) two-step cointegration method to examine the relationship between government expenditure and economic growth. Out of the four model specifications that we have tested, two models indicate that a positive long run relationship exists between government expenditure and economic growth. However, the income elasticities are not large enough to suggest that the growth in government expenditure exceeds the growth in national income; only that upward pressure is exerted. Looking at available data it is clear that governmental expenditures from GDP expansions increased public welfare for Saudis over the test period.

This study answers two questions about power sector reform in Moldova. First, did reform affect the poor and the non-poor differently? Second, are household consumption patterns different for private and public distribution networks? The study concludes that reforms have not disproportionately affected the poor. The gap in electricity consumption between poor and non-poor is closing, as a result of improvements in the supply of electricity, particularly in rural areas, and the significant growth in income over the past four years. Moldova's residential electricity consumption remains exceptionally low and is probably highly inelastic, especially for the very poor. This implies that unless they are accompanied by increases in income, future tariff increases could create large potential consumer welfare losses-as well as large revenue gains for the utility. It also implies that there may be room for substantial welfare gains by helping households better manage their electricity ex...

... The VAT base for soft drinks includes the excise duty. Soft drinks provide a significant tax base. Of the 12 largest food and drink sectors, soft drinks accounted for a rather astonishing 20% of the total retail spending in 1995 (Soft Drinks Association in Ireland 1996, data sheet no. ...

Government expenditures have grown in Austria during most of the 20th century. In this paper, we present empirical evidence for this growth process and analyze some of its possible reasons. In particular, two prominent theoretical explanations for public sector growth are tested for Austria: first, Wagners Law hypothesizing a positive income elasticity of demand for public goods, and second, Baumols Cost Disease, relating public sector growth to above-average cost increases in the public sector as compared to the private sector. The empirical evidence confirms the importance of the Cost Disease for Austria but cannot confirm the validity of Wagners Law. Business cycles influence government expenditures in the short run, while a number of variables suggested by public choice theories except for fiscal illusion do not significantly influence the growth of the public sector in Austria.

On the quest for reducing the fuel consumption per passenger per flight for economical and environmental reasons, commercial aircraft manufacturers are implementing new strategies for optimising aircraft performance by using new lighter and stronger materials and enhancing engines' efficiencies in terms of fuel consumption and maintenance requirements. With the rising and falling of economies, whether in the Organization for Economic Cooperation and Development (OECD) countries or other developing countries, the aviation industry has been affected by multiple factors such as passenger traffic, freight traffic, airport capacities and oil prices. Aircraft manufacturers have worked on improving the engine efficiency of their newly built airplanes (e.g. Airbus's A-380 and Boeing's B-787), and many airports in the world have increased the number of their runways to face the increasing demand for air traffic in the world. Aviation efficiency can also be achieved through better load management, which in return enables airliners to cope with higher oil prices or rising costs. Aviation fuel demand is modelled in OECD North America, Europe and Pacific regions and some selected developing countries. Price elasticities of fuel demand in all regions are low, while income elasticities are high. The elasticity of aviation fuel demand on passenger kilometre performed (PKP) is considerably low. One per cent increase in PKP leads to less than half a per cent increase in aviation fuel demand, confirming an ongoing fuel efficiency in aviation industry.

This study is based on micro level data on urban household food consumption and expenditure collected between 1999 and 2000 in three Nigerian cities. The LA/AIDS model, which allows the inclusion of demographic variables, was applied to a subset of the data on meat and meat products namely beef, mutton/goat, chicken, fish, eggs, and milk. Results indicate that urban demand

Food systems in developing countries are currently undergoing a rapid transformation, with important implications for local farmers, wholesalers, and retailers. While supply side aspects of this transformation have been analyzed previously, issues of consumer demand have received much less attention. This paper analyzes changing consumption habits for fresh fruits and vegetables in Vietnam, using household survey data and a demand systems approach. Demand for products from modern supply chains – particularly modern retailers and non-traditional imports – is highly income elastic. Also, supermarket expansion impacts on consumer demand. This implies a continued restructuring of the food sector in the further process of economic development.

The Philippines has undergone a series of trade reforms since the mid-1980s that have reduced protection on nonagricultural goods. However, protection on key food items is still in effect, and this has led to high domestic food prices. Such high prices have a considerable negative effect on poverty because more than 60 percent of the consumption of poor Filipino households

This paper examines the impact of trade liberalisation on the trade balance and balance of payments in Mexico. Two events are identified as being important in this regard. The first one is when trade liberalisation started in a serious way in 1985 and Mexico became a member of GATT in 1986. The second event is related to facts involved in Mexico's accession to NAFTA in 1994. Complete trade balance and balance of payments functions, starting from their simple expression, are specified. The models are then extended to include liberalisation indicators, defined as shift dummy variables. The econometric evidence, by applying time-series analysis, shows that the trade reforms launched during the mid-1980s worsened the position of the trade balance by between 14 and 18 percentage points. Regarding the effects of trade liberalisation related to NAFTA on the trade balance, a negative impact is shown during the immediate two years after NAFTA came out. The effects of liberalisation on t...