Iranian Journal of Economic Research

Inflation and Rural Household Saving; A Case Study of Fars Province

Document Type : Research Paper

Authors

Zoorar Permeh 1
Mohammad Ghorbani 2

1 Researcher in Institute for Trade Studies and Research

2 Assistant Professor, University of Mashhad

Abstract
This paper aims at estimation of own price elasticity, cross price elasticity and elasticity of saving with respect to income and price in the framework of the linear expenditures system (LES). Our findings show that aggregate marginal propensity to expenditure (MPC) is 0.72 beverange, fast food and tobacco products, and housing are 0.098 and 0.08, respectively.  The lowest MPC belongs to flour, cereal and bread with 0.028. Estimated income elasticity of goods and services dedicate that foods (excluding beverage, fast food and tobacco products) are necessity but housing, transportation, communication and entertainment are luxury. The price elasticity of saving reveals that any increase in flour and products, meat, milk and products, edible oils, fruits and vegetables, clothing and footwear will result in a decrease in the saving. The income elasticity of saving is 2.45.

Keywords

Inflation
Saving
Linear Expenditures System (LES). Own Price Elasticity
Cross Price Elasticity
Elasticity of Saving with Respect to Income and Price

  • Receive Date 15 May 2016
  • First Publish Date 15 May 2016

Home

editorial board

Guide for Authors

Submit Manuscript

Contact Us