Rural-Urban Differences and the Stability of Consumption Behaviour: An Inter-temporal Analysis of the Household Income and Expenditure Survey Data for the Period 1963-64 to 1984-85

Several studies have been undertaken in the past to analyse consumption behaviour in Pakistan. These studies have ranged from the fairly simple single equation estimations to complex, extended linear expenditure systems and analyses based on the Almost Ideal Demand System. These included the studies by Aziz-ur Rehman (1%3); Bussink (1970); Ranis (1961); Khan (1970); Ali (1981, 1986); Malik (1982); Siddiqui (1982); Mukhtar (1985); Cheema and Malik (1985); Ahmad et al (1986); and Alderman (1987). Most of these studies are based on the Household Income and Expenditure Survey data. These Surveys provide the single most important source of data on consumption behaviour in Pakistan. However, the analysis in the studies mentioned above are generally confined to single years only. The present study is an attempt to econometrically establish the existence, or otherwise, of rural-urban differences in consumption behaviour in each year for the years in which these survey data are available in published form. 1 Tests are also conducted on appropriately deflated data to establish the existence or otherwise of differences in yeady functions. The former hypothesis has obvious implications for the possibility of estimating overall, or Pakistan-level functions, while the latter has obvious implications for estimating marginal propensities or elasticities based on time-series data.

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