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Jurnal Ekonomi Malaysia

55 (2) 2021 39 – 49

Estimating Expenditure Pattern and Permanent Income Hypothesis: Evidence from Kelantan Malaysia
Anggaran Pola Perbelanjaan dan Hipotesis Pendapatan Tetap: Kajian di Kelantan Malaysia

Faculty of Hospitality, Tourism and Wellness
Universiti Malaysia Kelantan
Kampus Kota, Karung Berkunci 36,
Taman Bendahara, 16100 Pengkalan Chepa, Kelantan
MALAYSIA

fahme.ma@umk.edu.my

Faculty of Hospitality, Tourism and Wellness
Universiti Malaysia Kelantan
Kampus Kota, Karung Berkunci 36,
Taman Bendahara, 16100 Pengkalan Chepa, Kelantan
MALAYSIA

aziah.mr@umk.edu.my

Faculty of Hospitality, Tourism and Wellness
Universiti Malaysia Kelantan
Kampus Kota, Karung Berkunci 36,
Taman Bendahara, 16100 Pengkalan Chepa, Kelantan
MALAYSIA

ruzanifah@umk.edu.my

Faculty of Hospitality, Tourism and Wellness
Universiti Malaysia Kelantan
Kampus Kota, Karung Berkunci 36,
Taman Bendahara, 16100 Pengkalan Chepa, Kelantan
MALAYSIA

suchi.h@umk.edu.my

Faculty of Hospitality, Tourism and Wellness
Universiti Malaysia Kelantan
Kampus Kota, Karung Berkunci 36,
Taman Bendahara, 16100 Pengkalan Chepa, Kelantan
MALAYSIA

salina.s@umk.edu.my

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

income and expenditure elasticity; Kelantan; Malaysia; Permanent income hypothesis; poverty

JEL Codes

B10, D15, D31, E21
http://dx.doi.org/10.17576/JEM-2021-5502-4
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Bibliography

Export Bibliography

Mohd Ali, , Mohd Radzi, , Kosnin, , Hassan, , & Saidin, (2021). Estimating Expenditure Pattern and Permanent Income Hypothesis: Evidence from Kelantan Malaysia. Jurnal Ekonomi Malaysia, 55(2), 39–49. http://dx.doi.org/10.17576/JEM-2021-5502-4

@article{mohdali2021estimating,
  title={Estimating Expenditure Pattern and Permanent Income Hypothesis: Evidence from Kelantan Malaysia},
  author={Mohd Ali, Ahmad Fahme and Mohd Radzi, Naziatul Aziah and Kosnin, Ruzanifah and Hassan, Suchi and Saidin, Siti Salina},
  journal={Jurnal Ekonomi Malaysia},
  volume={55},
  number={2},
  pages={39—49},
 

year={2021},
}

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