Consumption of durables, non‐durables and services in New Zealand: A system‐wide analysis

Publisher Website
Google Scholar
Abstract
In an attempt to provide more information for policy outcome evaluation, this paper investigates the economic behaviour of private consumption in New Zealand adopting the system‐wide approach to demand analysis. The popular Rotterdam model is estimated utilising a set of recent data. Under this study, consumption is broadly classified into three categories, namely durables, non‐durables and services. The results show that the data satisfy three key consumer demand hypotheses ‐ demand homogeneity, Slutsky symmetry and preference independence, and also support the law of demand. The estimated income elasticities are 1.35, 0.70 and 0.93 for durables, non‐durables and services respectively; the own‐price elasticities are ‐0.49, ‐0.36 and ‐0.38; and the cross‐price elasticities are all positive but small.