Empirical Model For East Coast Of Peninsular Malaysia Household Expenditure
Income and expenditure are the main aspects to be highlighted in nowadays situation as they contribute to the quality of life of the Malaysian society. In the Ninth Malaysia Plan for 2006-2010, poverty eradication is one of the socio-economic aspects that need to be emphasized in order to capture the target household of those who are in the poor groups. The objective of this paper is to identify the pattern of income and expenditure among the households’ of East Coast of Peninsular Malaysia during the current economic situation. Besides, it also tries to analyze the percentage of these household spending as a share of their income in fulfilling their needs. Lastly this paper is intended to identify factors contributing to the above scenarios. Snodgrass (1989) disclosed that about 75 percent of the household incomes were spent on food while finding by Dejuan (1999) and Cutler (2005) reported that there was a significant and strong relationship between income and wealth with household’s expenditure. Using primary data a system of simultaneously equations, namely the Two Stage Least Squares (2SLS) was applied. This paper will illustrate potential variables associated with the income and expenditure. Some of these variables that are stipulated to show high correlation with the total expenditure are the housing loan, automobile loan and educational expenditure
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