Demand analyses of rice in Malaysia

TEY (John) Yeong-Sheng (), Mad Nasir Shamsudin, Zainalabidin Mohamed, Amin Mahir Abdullah and Alias Radam ()

MPRA Paper from University Library of Munich, Germany

Abstract: As a typical developing Asian county, the growth in per capita income generally brings to diversification in Malaysians food basket. The most significant observation is the falling in per capita consumption of rice with continuous growth of demand for wheat based products. The objective of this study is to estimate the demand elasticities of rice in Malaysia, focusing whether rice is an inferior good. By using data from Household Expenditure Survey 2004/2005, this study obtains demand elasticities of rice, as well as for other 11 food items via Linear Approximate Almost Ideal Demand System (LA/AIDS) and Quadratic Almost Ideal Demand System (QUAIDS). The empirical results indicate that income elasticity of demand for rice (0.7104) is the highest compared to other food items in the LA/AIDS model, while income elasticity of demand for wheat (0.5087) is higher than rice (0.4712). Both of the income elasticities of demand for rice suggest that rice is not an inferior good in Malaysia. However, by comparing both estimates of demand elasticities and adjusted R2s, the QUAIDS model provides more plausible results than the LA/AIDS model.

Keywords: Rice; Wheat; Inferior Good; Linear Approximate Almost Ideal Demand System; Quadratic Almost Ideal Demand System; Income Elasticity (search for similar items in EconPapers)
JEL-codes: D12 Q11 (search for similar items in EconPapers)
Date: 2008-08-07
New Economics Papers: this item is included in nep-agr and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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