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Demand elasticities for 9 goods in 37 countries

Author

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  • Kenneth W Clements
  • Jiawei Si
  • Eliyathamby A. Selvanathan
  • Saroja Selvanathan

Abstract

In most OECD countries, consumption absorbs more than three fourths of their country’s GDP. Therefore, the study of their consumption patterns is important. This paper gives up-to-date estimates of income and price elasticities for 9 commodities in each of 37 countries that are members (or affiliates) of the OECD. In addition, the paper presents a detailed analysis of OECD consumption patterns in the form of investigating empirical regularities and testing demand theory hypotheses. Using differential demand equations, we find that the hypothesis of homogeneity hypothesis is supported in all countries; there is some evidence that symmetry is problematic, although we cannot be sure about this; and preference independence (whereby the marginal utility of each good depends only on its consumption) is not rejected in 90% of the countries. The study also finds that income elasticities of rich countries are generally lower than those of poorer countries, and, in general, there is a negative linear relationship between own-price elasticities and income. These elasticities can be used as key inputs in economic policy modelling such as CGE modelling and GST estimation.

Suggested Citation

  • Kenneth W Clements & Jiawei Si & Eliyathamby A. Selvanathan & Saroja Selvanathan, 2020. "Demand elasticities for 9 goods in 37 countries," Applied Economics, Taylor & Francis Journals, vol. 52(24), pages 2636-2655, May.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:24:p:2636-2655
    DOI: 10.1080/00036846.2019.1693698
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    Cited by:

    1. Imran Ur Rahman & Mohsin Shafi & Liu Junrong & Enitilina Tatiani M.K. Fetuu & Shah Fahad & Buddhi Prasad Sharma, 2021. "Infrastructure and Trade: An Empirical Study Based on China and Selected Asian Economies," SAGE Open, , vol. 11(3), pages 21582440211, July.
    2. Rathnayaka, Shashika D. & Selvanathan, Eliyathamby A. & Selvanathan, Saroja, 2022. "Modelling the consumption patterns in the Asian countries," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 277-296.
    3. Eliyathamby A. Selvanathan & Saroja Selvanathan & Lucille Wong & Maneka Savithri Jayasinghe, 2021. "Modelling Regional Consumption Patterns in Australia," The Economic Record, The Economic Society of Australia, vol. 97(317), pages 141-156, June.
    4. Nivison Nery Jr. & Juan P Aguilar Ticona & Claudia Gambrah & Simon Doss-Gollin & Adeolu Aromolaran & Valmir Rastely-Júnior & Millani Lessa & Gielson A Sacramento & Jaqueline S Cruz & Daiana de Oliveir, 2021. "Social determinants associated with Zika virus infection in pregnant women," PLOS Neglected Tropical Diseases, Public Library of Science, vol. 15(7), pages 1-12, July.
    5. Lim, Kai Zhuo & Lim, Kang Hui & Wee, Xian Bin & Li, Yinan & Wang, Xiaonan, 2020. "Optimal allocation of energy storage and solar photovoltaic systems with residential demand scheduling," Applied Energy, Elsevier, vol. 269(C).
    6. H. Youn Kim & José Alberto Molina & Ka Kei Gary Wong, 2022. "Durable Goods and Consumer Behavior with Liquidity Constraints: Evidence from Norway," Boston College Working Papers in Economics 1047, Boston College Department of Economics.

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