An Analysis of Consumption Behavior among Urban Households through Error Correction model Linear Approximate of Almost Ideal Demand System

Subject Areas : Applied Economics

A. Moradi ¹ , F. Mostashari ²

1 - نویسنده مسئول
2 - -

Received: 2015-10-05 Accepted : 2015-10-05 Published : 2015-01-21

Keywords: : Almost Ideal Demand System, Error Correction Model, Co-integration approach, Blundell-Anderson Test.&#x0D, &#x0D, JEL , C32, C30, C12, R20,

Abstract :

The present paper studies consumption pattern of the following selected items; housing, appliances & furniture, fuel and clothing, for urban households in Iran through Error Correction Model Linear Approximate of Almost Ideal Demand System (ECM-LA-AIDS) based on a co-integration approach from 1980 to 2010. The results indicate that while Iranian households suffer from money illusion, there is speedy adjustment toward long-run equilibrium in the first three markets. Comparing short-term price elasticities of demand with long-term Marshal/Hicks elasticities indicate that implementation of price control are more effective in short run. However, expenditure elasticities for all categories except clothing are higher in the long-run.