An Analysis of Farm Household Expenditures on Basic Living Materials in Japan

Using cross-section data, the demand elasticities for basic living materials were estimated by least-squares and instrumental variables. Income and own- and cross-price elasticities were derived from time-series data by ordinary least-squares and combined technique. It is interesting to compare the estimated parameters using different estimating methods. The order of magnitude of the income elasticities contained few surprises. Most of the price elasticities carried correct signs, but the majority of them were insignificant. Income is much more important than prices in explaining Japanese consumption. Most of the estimates are similar to those obtained by others. Expenditure patterns between the Japanese farm households and the U.S. farm households can be compared.