Estimating Expenditure Pattern and Permanent Income Hypothesis: Evidence from Kelantan Malaysia

Ahmad Fahme Mohd Ali (), Naziatul Aziah Mohd Radzi (), Ruzanifah Kosnin (), Suchi Hassan () and Siti Salina Saidin ()
Additional contact information
Ahmad Fahme Mohd Ali: Faculty of Hospitality, Tourism and Wellness Universiti Malaysia Kelantan Kampus Kota, Karung Berkunci 36, Taman Bendahara, 16100 Pengkalan Chepa, Kelantan MALAYSIA
Naziatul Aziah Mohd Radzi: Faculty of Hospitality, Tourism and Wellness Universiti Malaysia Kelantan Kampus Kota, Karung Berkunci 36, Taman Bendahara, 16100 Pengkalan Chepa, Kelantan MALAYSIA
Ruzanifah Kosnin: Faculty of Hospitality, Tourism and Wellness Universiti Malaysia Kelantan Kampus Kota, Karung Berkunci 36, Taman Bendahara, 16100 Pengkalan Chepa, Kelantan MALAYSIA
Suchi Hassan: Faculty of Hospitality, Tourism and Wellness Universiti Malaysia Kelantan Kampus Kota, Karung Berkunci 36, Taman Bendahara, 16100 Pengkalan Chepa, Kelantan MALAYSIA
Siti Salina Saidin: Faculty of Hospitality, Tourism and Wellness Universiti Malaysia Kelantan Kampus Kota, Karung Berkunci 36, Taman Bendahara, 16100 Pengkalan Chepa, Kelantan MALAYSIA

Jurnal Ekonomi Malaysia, 2021, vol. 55, issue 2, 39-49

Abstract: The purpose of this paper is to investigate the consumption function among households in Kelantan Malaysia based on the Permanent Income Hypothesis (PIH). This study used secondary data obtained from annual reports, as well as from published and non-published data between 2000 and 2016. The ARDL bound testing approach to deal with cointegration was applied to estimate the long run correlation between the variables. Meanwhile, the error correction method (ECM) was used to determine any short run correlation. This study found a large disparity between the elasticity to consume from current income and the elasticity to consume from permanent income among households in Kelantan. Therefore, it can be concluded that in the case of Kelantan, the PIH is valid.

Keywords: Kelantan; Malaysia; Permanent income hypothesis; income and expenditure elasticity; poverty (search for similar items in EconPapers)
JEL-codes: B10 D15 D31 E21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.ukm.my/jem/wp-content/uploads/2021/10/jeko_552-4.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ukm:jlekon:v:55:y:2021:i:2:p:39-49

DOI: 10.17576/JEM-2021-5502-4

Access Statistics for this article

More articles in Jurnal Ekonomi Malaysia from Faculty of Economics and Business, Universiti Kebangsaan Malaysia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Asri Abd Ghani ().