An Analysis on Household Expenditure in Rural Cambodia Extended Linear Expenditure System Model (ELES)

Abstract

This study aims to estimate the parameters of an Extend linear expenditure system (ELES) demand function, including elasticities of expenditure, own-price, and cross-price elasticities. It further examines the household demand consumption in a rural Cambodia, using the 2017 household survey data conducted in three provinces of Cambodia namely; Takeo, Kandal and Kompong Speu. We randomly selected 240 farmers based on the regulation and sample distribution. The results show that, with regard to the estimation, own-price elasticities are comparatively inelastic demand for all commodities. On the other hand, findings show that income elasticity is positive in sign. The equipment has the highest income elasticity 10.374, which indicates that the equipment is a necessary commodity. These results reflect the higher income elasticities for all commodities, signifying that the commodity's demand will increase with increasing income.