Household Budget Analysis for Pakistan under Varying the Parameter Approach

Eatzaz Ahmad and Muhammad Arshad
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Eatzaz Ahmad: Quaid-i-Azam University, Islamabad.
Muhammad Arshad: International School of Industrial Business Management, Shanghai University, China

No 2007:41, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: Using micro-level household data for rural and urban Pakistan, this study estimates Engel equations for 22 commodity groups with quadratic spline specification, in which the number and locations of knots are determined through a search procedure. The study finds that the resulting flexibility produces many interesting patterns of changes in the classification of goods into necessities and luxuries across income ranges. This suggests that a uniform tax structure will have varying implications for budget allocation and welfare of households belonging to different income classes. This information can be gainfully utilised in preparing income transfer policies that could supplement uniform tax regimes.

Keywords: Consumer Economics; Empirical Analysis (search for similar items in EconPapers)
JEL-codes: D12 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007
New Economics Papers: this item is included in nep-cwa
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Citations: View citations in EconPapers (3)

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