Effect of Income Inequality on Consumption Expenditure Inequality in Iran, 1982-2007

Subject Areas : Bi-quarterly Journal of development economics and planning

M.H. Fotros ¹ (Economic Department, College of Economics and Social Sciences, Booalisina University, Hamedan)
R. Maaboudi ² (Ph.D. student, Economic Department, College of Economics and Social Sciences, Booalisina University, Hamedan)

Received: 2016-03-01 Accepted : 2016-03-01 Published : 2012-08-22

Keywords: Panel Data, Income inequalities, consumption distribution, Unit Root Test, household budget,

Abstract :

On the basis of macroeconomic consumption theories, consumption behavior as compared to income is more stable. Overtime income inequality that is, appeared as fluctuation and dispersion in income, would affect consumption expenditure. In this paper the extent of consumption expenditure inequality that are caused by income fluctuation and dispersion was analyzed. The inequalitiesof household consumption expenditure were analyzed for eight goods and services categories. Urban household budget panel data for the years of 1982 to 2007 were used and causal relationship between the variables analyzed. The results showed that not all of the fluctuation and dispersion in income were transferred to consumption expenditure. Therefore, consumption expenditure was less dispersed than income.

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