Linear Expenditure System Research Articles

Convenient Way of Extend Linear Expenditure System Modeling without Regression

Extend Linear Expenditure System model is a collection of multiple linear models, and modeling is a clearly tedious process. The innovation of this paper is trying to find a simple way of ELES modeling, which means, in order to omit the modeling process one by one, we try to use Excel functionality to create a model workplace. As long as you replace the original sample data in the workspace, you can get the results you want.

ELES-Model Based Housing Affordability Comparative Research of Urban Households in Beijing between 2004 and 2013

Abstract In this paper, we apply the model of the extended linear expenditure system to measure housing affordability of urban households in Beijing, and calculate the affordable housing areas of urban households which are on different income levels in Beijing in 2013 and 2004. In this study, we find that, the household disposable incomes of urban households in Beijing increase along with the development of economy, all income levels of urban households in Beijing can cover the expenditures of their basic life needs, housing affordability of urban households of different income levels in Beijing is increasing. However, because the growth of house prices is faster than the growth of disposable income of urban households in Beijing, the affordable housing areas of urban residents in Beijing is decreasing. To solve the housing problem in Beijing, the government must find ways to increase households’ income and carry out efficient ways to control the growth of housing price.

Urban Household Water Demand in Beijing by 2020: An Agent-Based Model

Beijing is faced with severe water scarcity due to rapid socio-economic development and population expansion, and a guideline for water regulation has been released to control the volume of national water use. To cope with water shortage and meet regulation goal, it has great significance to study the variations of water demand. In this paper, an agent-based model named HWDP is developed for the prediction of urban household water demand in Beijing. The model involves stochastic behaviors and feedbacks caused by two agent roles which are government agent and household agent. The government agent adopts economic and propagandist means to make household agent optimize its water consumption. Additionally, the consumption is also affected by the basic water demand deduced from extended linear expenditure system. The results indicate that the total water demand of urban households in Beijing will increase to 317.5 million cubic meters by 2020, while the water price keeps growing at a low level. However, it would drop to 294.9 million cubic meters with high growth of water price and low increment in per capita disposable income. Finally, some policy recommendations on water regulation are made.

基于ELES模型的南宁市城镇居民消费 结构分析

运用扩展线性支出系统(ELES)模型对南宁市城镇居民收入和消费数据进行研究，分析了南宁市城镇居民消费结构、边际消费倾向、收入弹性等，揭示了南宁市城镇居民消费行为特征及相应变动规律。 This paper takes urban residents in Nanning for example to do empirical study. Using the Extended Linear Expenditure System Model (ELES Model), we made a research on the data of urban residents’ income and consumption, and analyzed the consumption structure, marginal propensity of consumption, and income elasticity which reveal the characteristics of consumer behavior of urban residents in Nanning.

Estimating the Poverty Line and Living Conditions of Rural Households: A Case Study

Poverty has always been studied in a world of certainty. However, if the aim of studying poverty is not only improving the well-being of households who are currently poor, but also preventing people from becoming poor in the future, a new forward looking perspective must be adopted. For thinking about appropriate forward-looking anti-poverty interventions (i.e. interventions that aim to prevent or reduce future poverty rather than alleviate current poverty), the critical need then is to go beyond a cataloging of who is currently poor and who is not, to an assessment of households’ vulnerability to poverty. In this paper, the cost and income of rural households in Khuzestan province have been reviewed and analyzed. Subjective poverty line in terms of behavioral observation were estimated by estimating linear expenditure system (LES) based utility function Stone - Gray and using household budget data (1991-2003) for rural area in Khuzestan province. The product portfolio that were estimated for the minimum wage (poverty line) including food, clothing, housing and health. According to the estimates, the minimum required expenditure for a rural household in Khuzestan province with average household size 9/6 persons in 1991 to 339,182 Rls, and in 1996 was 21,407,484 Rls that in 2009 was equivalent to 4,415,051 Rls.

DEFISIT APBN DAN PEMULIHAN EKONOMI PASCA KRISIS

This research attempts to analyze the impact of deficit fiscal policy on the private expenditure in the case of Indonesia over the post crisis 2000-09 periods. The analysis is based on the goods market equilibrium. The approach is designed to analyze whether the government expenditure crowds out the private expenditure. In order to reach the objective of the study,this researchused the Linear Expenditure System (LES) and compared to the Almost Ideal Demand System (AIDS). The estimation result of quarterly data shows that the government expenditure did not crowd out the private expenditure. The crowding out only occurs partially especially on the private investment. However, the government expenditure totally remains stimulating the private expenditures. This, in turn, leads to increase the gross domestic product. Those results indicate that the expansionary fiscal policy effectively affects to the economic growth especially after economic crisis in 1997. Even, the income elasticity was much greater than that in the pre-crisis periodsDOI: 10.15408/sjie.v2i2.2422

The Linear Expenditure System and the Demand for Municipal Public Services: The Median Voter Specification Revisited

Following Bergstrom and Goodman (1973), this paper contributes to the set of studies estimating demand for publicly provided goods and services. The main innovation in this paper is methodological as it uses a Stone–Geary utility function to describe median voter preferences. Unlike in previous studies, the local public expenditure function, in a (simplified) linear expenditure system, can be derived directly from the theoretical framework. The translated expenditure function provides an estimate of the minimum required local public services in each municipality. Using cross-sectional municipal data from France, it is found to be, at the most, 30 per cent of the total per capita expenditure. Compared with the specification conventionally used in the literature, linear and non-linear expenditure systems show a greater sensitivity to price and income variations and reveal a greater number of significant variables.

Estimation of Interdependent Behavior of City Government Units of the Philippines Using the Les Model

For local units to be effective in their functions, their resources need to be spent in a way that will meet the need of local community. The main objective of the study is to estimate the demand of the basic social services provided by the city governments in the Philippines with the influence of spatial effects using the Linear Expenditure System (LES). The study used the descriptive research technique. Results showed that the LES model incorporated with spatial effects fits the data reasonably well compared to the LES model without spatial effect. Fiscal interactions among cities were found significant with education and social welfare services. Subsistence expenditure level of each service sector was found statistically significant except for local tax revenue that was treated as negative expenditure. Some identified cost variables of respective service sectors were found significant predictors of subsistence expenditure level of each service sectors. All marginal discretionary income shares were found statistically significant across the service sectors. The studies conclude that both population density and saving rate of the previous year significantly predicted marginal discretionary income share of each service sector. Elasticity results revealed that all basic social services were found to be normal goods and demands for these services tend to be inelastic with respect to government income. Keywords - demand system, discretionary income, lagged dependent variable, LES, NSUR, spatial econometrics, spatial effect, and subsistence expenditure.

Psychophysical Interpretation for Utility Measures

Abstract The paper explores utility measures by combining experiments with mathematical derivations in the psychophysics paradigm. The analysis on the ultimatum game experiment reveals evidences for the utility threshold and thus supports Bernoulli’s utility logarithmic law. Both experimental results and theoretical derivations show that the logarithmic law is suitable for the description of commodity choice and the power law for risk choice. The further mathematical demonstration indicates the logarithmic law for utility scaling to be a Klein– Rubin utility function, a utility function well defined in microeconomics. Based on this, the experimental utility measure is connected with the econometric model Linear Expenditure System, and presents an experimental procedure for testing the utility maximization hypothesis, which will resolve a long unsettled perplexity in a fundamental stone of economics since Gossen proposed it in 1854.

Economic Theory in Input-Output Framework

Input-Output (I-O) analysis has usually been considered as a set of techniques to collect, classify and organise the data on inter-industrial transactions that are involved in the production activities of an economic system and test hypotheses that emerge from economic theories. The possibility that it is itself a component of economic theory is not always taken seriously in mainstream economics. This paper uses I-O analysis to describe the supply situation and confronts it to the linear expenditure system that represents the final demand situation. What is obtained is a general equilibrium model that is an alternative to neoclassical general equilibrium models.

Sweet and Not-So-Sweet Charity

In order to maximize social welfare, governments should subsidize at different rates the private contributions made to different categories of charitable or publicly beneficial civic activity. This prescription stands in contrast to the standard practice of subsidizing such contributions uniformly and suggests the need to evaluate not only that practice but also the diverse initiatives of several governments to subsidize at higher rates certain contributions made to certain categories. The case for differential subsidies is made here with reference to a model in which the government chooses the subsidies and amounts of direct funding, as well as a personal transfer and linear taxes on earnings and consumption. The categories differ in terms of the individuals contributing, the individuals receiving the charitable goods and services, and the effectiveness of direct funding relative to contributions. A linear expenditure system illustrates the restrictive conditions necessary for uniform contribution subsidies being optimal.

Demand for Social Services of City Government Units Using the Linear Expenditure System: The Case of the Philippines

The main objective of the study is to construct demand system of the basic social services provided by the city governments in the Philippines using the Linear Expenditure System. It seeks to establish the income and expenditure pattern of city governments of the Philippines in 2008. Results revealed that cities with higher incomes are dependent to locally-generated income while cities with lower incomes are dependent on IRA funds. Expenditure share is highest in the education sector while lowest in the social welfare. Subsistence expenditure level of each service sector was found statistically significant except health and nutrition. Some identified cost variables of respective service sectors were found significant predictors of subsistence expenditure level of each service sectors. Marginal discretionary income shares were found statistically significant across the service sectors except for education. Elasticity results revealed that all basic social services were found to be normal goods and demands for these services tend to be inelastic with respect to government income. Keywords - demand system, discretionary income, IRA, LES, marginal discretionary income, NSUR, simultaneous equation and subsistence expenditure.

Equivalence Scale in Terms of Polish Households' Source of Income

Equivalence Scale in Terms of Polish Households' Source of Income The paper presents a comparison of the costs of Polish households by their main source of income. In order to compare these costs the author estimated three kinds of equivalence scales using the Engel method, ELES (Extended Linear Expenditure System), the demand equation and the Bernoulli well-being function. Estimation for household groups determined on account of the main source of income produced by the scales confirmed differences in households' maintenance costs compared to the costs of the reference household. A comparison of the values of equivalence scales revealed a similarity of the results produced by the ELES and the Bernoulli methods which differed from the results obtained by means of the Engel method.

An Empirical Analysis on the Consumption Structure of Town Residents, Jiangxi Province—Based on the Extended Linear Expenditure System Model (ELES)

Consumer demand is the original stimulate pulling economic growth. Consumption, in the process of economy growth, plays an important role, and its main functions is embodied in the following aspects: From the demand of economy, consumption has direct and indirect to boost world economic growth; from supply, consumer can create human resources necessary for production development, so as to create social productive forces; From the structure, the change of consumption structure is the basic reasons of industrial structure change, which can guide constantly upgrading of industrial structure and promote economic growth. In this paper, we, at first, put forward the background and significance of the research on town residents’ consumption structure in Jiangxi Province. Second, we briefly introduced the basic principle of extended linear expenditure system model (ELES) what would be used in this paper. Then, we, according as the data of consumption structure in recent years, used ELES to made an empirical analysis. Finally, we made a summary.

Psychophysical Interpretation for Utility Measures

The paper explores utility measures by combining experiments with mathematical derivations in psychophysics paradigm. The analysis on ultimatum game experiment reveals an evidence for utility threshold and thus supports Bernoulli's utility logarithmic law. Both experimental results and theoretical derivations show that the logarithmic law is suitable for the description of commodity choice and the power law for risk choice. The further mathematical demonstration indicates the logarithmic law for utility scaling to be a Klein-Rubin utility function, a utility function well defined in microeconomics. Based on this, the experimental utility measure is connected with the econometric model Linear Expenditure System, and presents an experimental procedure for testing the utility maximization hypothesis, which will remove a long unsettled perplexity in a fundamental stone of economics since Gossen proposed it in 1854.

Empirical Study on Minimum Wage Level in China: the ELES approach

In this paper, an attempt is made to determine the minimum living requirements (or poverty lines) of workers in China by adopting the Extended Linear Expenditure System. Comparison between the actual minimum wage levels implemented by the Chinese government and the estimated minimum living requirements in this paper reveal that, in early 2010, workers in 23 out of 35 sample cities were paid minimum wages below the estimated lowest poverty line. This group of workers is unable to afford minimum payments to meet basic living conditions for survival as their minimum wages were below the estimated survival line. To protect workers, the Chinese government is advised to address employee provisions for basic living needs.

Welfare Analysis Using Data from the International Comparison Program for Africa

Abstract: This paper uses data from the International Comparison Program 2005 to recover complete own and cross-price and income elasticity estimates for the African continent using the Extended Linear Expenditure System for 12 broadly defined commodities. The results can be used for aggregate welfare comparison in such global models as GTAP (Global Trade Analysis Project) and exercises to infer welfare impact of relative price shocks at the continental level. In a heuristic way also, it is possible to derive a ‘utility-consistent’ global poverty line from the demand function that could be compared with the popular international poverty lines. Results generally indicate that changes in the price of food items could lead to greater welfare loss compared to changes in the price of energy or other commodities. Income elasticity estimates generally fell within bounds usually found from household surveys. At the continental level, the estimated utility-consistent subsistence expenditure is $1.10 a day per person, which is quite close to the $1.08 a day global (international) poverty line used in 2005 to measure absolute poverty.

Redistributive impact of increasing block residential water rates: some empirical evidence from Mauritius

This paper presents empirical results on progressive incidence of water charges that contradict conventional wisdom in developing and many developed countries. Family size in Mauritius is larger among high-income categories relative to low-income groups. Because of this unusual demographic dimension, increasing block tariffs coupled with lifeline rates below long-term marginal costs applicable to low-volume users produce a different result. Regional disparities in water demand among residential users further contribute to a redistributive strategy. It is interesting to note that extensive metering in urban and rural areas allows low-income consumers to end up in low-rate blocks. Empirical estimates of price, income and household size elasticities for different income categories reveal that low-income households face more than average price elasticity of demand for water and less than average income and household size elasticity. In the light of these results, it has been established that increase in demand for water among richer households has the potential of improving equity in water charges. Computed marginal budget shares derived from a linear expenditure system show that the amount of supernumerary income would be higher for richer people, so that a percentage increase in income may result in higher level spending on water when compared to lower-income households.

A SIMULTANEOUS EQUATIONS MODEL OF FISCAL POLICY INTERACTIONS*

ABSTRACT Existing studies of fiscal policy interactions are based on single equation (SE) models of either taxation or expenditures, without specifying the underlying social welfare function, without taking account of budget constraints and without allowing for cost differences between jurisdictions. Taking all this into account, we derive an extended version of the linear expenditure system with policy interaction effects. We use this system to simultaneously estimate interactions in both taxation and different spending categories among Dutch municipalities. Our interaction parameters tend to be higher than those estimated using conventional SE models.

The Welfare Impact of Price Changes on Household Welfare and Inequality 1999-2010

This paper attempts to use applied micro-economic research to understand the impact of price changes over the period 1999-2011 in Ireland. This measure combines an efficiency component using a Linear Expenditure System (LES) and an equity component using the Atkinson Index of Inequality. The efficiency component includes the behavioural response to price changes for non-subsistence expenditures thereby producing a Cost of Living Index. The Atkinson Index of Inequality produces an inequality measure and this is combined with the Cost of Living Index to produce an overall welfare measure. This extends upon the existing Irish literature on this issue by accounting for this broader set of components. The results show that changes in the cost of living have differed substantially between households both in terms of demographics and the position of the household in the income distribution and that behavioural response can potentially improve the welfare position of households in response to price changes in most years.