Is Indonesia's growth rate balance-of-payments-constrained? A time-varying estimation approach

2019 ◽  
Vol 7 (4) ◽  
pp. 537-553
Author(s):  
Jesus Felipe ◽  
Matteo Lanzafarne ◽  
Gemma Estrada
Keyword(s):  
Growth Rate ◽  
Structural Changes ◽  
Income Elasticity ◽  
Value Added ◽  
Balance Of Payments ◽  
Elasticity Of Demand ◽  
Income Elasticities ◽  
Employment Share ◽  
Fixed Capital Formation ◽  
Income Elasticity Of Demand

This paper analyses the performance of Indonesia's economy since the early 1980s using Thirlwall's balance-of-payments-constrained (BoPC) growth model, estimated in state-space form to take account of the varying nature of the income elasticities of demand for exports and imports. Results indicate that after peaking in the mid 1980s at above 10 percent, Indonesia's BoPC growth rate has declined significantly, to about 3 percent in recent years. This is the result of changes in the three components of this growth rate: the income elasticities of demand for exports and imports, and the growth rate of world income, all three significantly lower. Especially worrisome for Indonesia's future is the decline in the income elasticity of demand for exports, a variable that summarizes the non-price competitiveness of its exports. This is the consequence of the lack of progress in upgrading the export basket and increasing its sophistication, with natural resources and low value-added manufacturing still dominating the country's exports. Focusing on the two income elasticities, the analysis shows that their determinants are variables that proxy the economy's structural changes (for example, the manufacturing employment share) and within-sector productivity growth (for example, complexity of the economy, gross fixed capital formation as a share of GDP).

scholarly journals Income elasticity of demand within individual consumer groups and the level of income elasticity of the entire market demand 

2012 ◽  
Vol 52 (No. 9) ◽  
pp. 412-417
Author(s):  
P. Syrovátka
Keyword(s):  
Consumer Behaviour ◽  
Income Elasticity ◽  
Meat Products ◽  
Market Demand ◽  
Demand Functions ◽  
Elasticity Of Demand ◽  
Income Elasticities ◽  
Aggregation Equation ◽  
Application Potential ◽  
Income Elasticity Of Demand

The paper is focused on the derivation of the mathematical relationship among the income-elasticity level of the entire market demand and the income-elasticity values of the demand functions of the consumers’ groups buying on the defined market. The determination of the mathematical term was based on the linearity of the relevant demand functions. Under the linearity assumption, the income elasticity coefficient of the entire market demand equals the weighted sum of the income-demand elasticities of the differentiated consumer groups buying on the given market. The weights in the aggregation formula are defined as the related demand shares, i.e. as the proportions of the groups’ demands to the entire market demand. The derived aggregation equation is quite held if no demand interactions (e.g. the snob or fashion effect) are recorded among differentiated consumers’ groups. The derived formula was examined by using empirical data about the consumer behaviour of Czech households in the market of meat and meat products (Czech Statistical Office). However, the application potential of the achieved term for the income-elasticity aggregations is much broader within the consumer-behaviour analysis. In addition to the subject aggregations of the demand functions, we can also apply the derived formula for the analysis and estimations of the income elasticities within the demand-object aggregations, i.e. the multistage analysis of the income elasticity of consumer demand. Another possibility of the use of the aggregation equation is for the evaluations and estimations of the income elasticity of the region-demand functions in relation to the subregions’ demands or reversely.

Income elasticity of demand for tourism at Fulufjället National Park

2017 ◽  
Vol 24 (1) ◽  
pp. 51-63 ◽  
Author(s):  
Peter Fredman ◽  
Daniel Wikström
Keyword(s):  
National Parks ◽  
Low Income ◽  
National Park ◽  
Income Elasticity ◽  
Tourism Industry ◽  
Elasticity Of Demand ◽  
Income Elasticities ◽  
Tourism Product ◽  
Attraction System ◽  
Income Elasticity Of Demand

National Parks are significant markers in the tourism attraction system and represent an important supply of recreation opportunities for the clients of the nature-based tourism industry. In this study, we analyze income elasticities among visitors from two major nationalities at Fulufjället National Park (FNP)—a cross-boundary park between Sweden and Norway—to see if this tourism product is a luxury or not. Modeling demand with a Tobit model, we find that visiting this National Park is close to a luxury, but results also show that elasticities differ across both income and nationality: FNP is more likely to be a luxury good among low-income Germans and high-income Swedes. The article concludes with a discussion on policy and management implications from these results.

scholarly journals The Income Elasticity of Gambling in Australia and New Zealand

2015 ◽  
Vol 8 ◽  
Author(s):  
Jamie Davies
Keyword(s):  
New Zealand ◽  
Income Elasticity ◽  
Luxury Good ◽  
Gaming Industry ◽  
Elasticity Of Demand ◽  
Income Elasticities ◽  
Industry Sector ◽  
Alternate Hypothesis ◽  
Australian Bureau Of Statistics ◽  
Income Elasticity Of Demand

This paper analyses disposable income as it relates to consumer demand for gambling products in Australia and New Zealand from Financial years (FY) 1998 to 2008. The hypothesis is that income elasticity of demand for gambling products is greater than one i.e. gambling products are a luxury good. The alternate hypothesis is that the income elasticity of demand for gambling products are less than one and are classed as either necessity or inferior goods. Data compiled by the Queensland Treasury and Trade department, the Australian Bureau of Statistics, Statistics New Zealand and the New Zealand Department of Internal Affairs was used to calculate income elasticities for all gambling products. The results indicate that income elasticity for gambling products varies over time and is greater than one pre FY2003 and less than one post FY2003. However, once the change in market share of different gambling products and the large increase in supply in the gaming industry sector (pre FY2003) was accounted for, income elasticities were estimated to be less than one in support of the alternate hypothesis.

Price and Income Elasticity of Demand for Services in India: A Macro Analysis

2019 ◽  
Vol 67 (3-4) ◽  
pp. 334-349
Author(s):  
Satyanarayan Kishan Kothe
Keyword(s):  
Support Services ◽  
Structural Changes ◽  
Income Elasticity ◽  
Theoretical Explanation ◽  
Domestic Demand ◽  
New Economic Policy ◽  
Services Sector ◽  
Elasticity Of Demand ◽  
Product Service ◽  
Income Elasticity Of Demand

India has a higher share of services and rapid growth in its services sector that have contributed to the overall economic growth phenomenally. The services revolution recently experienced have caused services-led growth in India. There have been questions raised on the sustainability of services-led growth achieved by India. Besides exports of services, domestic consumers and producers also consume services. Domestic demand for services equally contributes to India’s services-led growth paradigm. The New Economic Policy, 1991 has a significant role in taking India on a services-led growth paradigm. The present study is an attempt to provide a substantial theoretical explanation through demand-side to support services-led growth. The paper estimates the demand for services overall and also for disaggregated sub-sectoral services. The present study estimates the price and income elasticity of demand for services from 1951 to 2010. The study endeavours to find structural changes in demand for services during pre and post-liberalised periods (1951–1990 and 1991–2010) through the most important determinants of demand for any product/service, that is, price and income. The study finds a structural change in demand for services corresponding to income and price. The study finds that India’s services are income elastic and are very unresponsive for the increase in price. Hence, it substantiates that domestic demand for services will help to sustain the services-led growth.

scholarly journals ANALISIS PERMINTAAN KEDELAI DI INDONESIA

2017 ◽  
Vol 12 (1) ◽  
pp. 42
Author(s):  
Septi Rostika Anjani ◽  
Dwidjono Hadi Darwanto ◽  
Jangkung Handoyo Mulyo
Keyword(s):  
Regression Analysis ◽  
Capita Income ◽  
Income Elasticity ◽  
Descriptive Analysis ◽  
Linear Regression Analysis ◽  
Secondary Data ◽  
Per Capita Income ◽  
Elasticity Of Demand ◽  
Per Capita ◽  
Income Elasticity Of Demand

This study aims to analyze the factors that influence the demand of soybean in Indonesia. The research method uses descriptive analysis of secondary data which includes the price of imported soybeans, the price of chicken, per capita  income,  the rate of inflation and import tariff policy  year period 1980-2013 which sourced from FAO  and  other  sources.  Estimation  of  demand  function  using  multiple  linear regression  analysis  were  transformed  in  the  form  of  natural  logarithm.  Regression analysis showed that soybean demand in Indonesia was influenced partially by prices of chicken, per capita income, and the rate of inflation. The price elasticity of demand of soybean in Indonesia is inelastic, that is equal 0,22. While the income elasticity of demand  for  soybeans  is  positive  which  means  that  soy  is  a  staple  item  for  the Indonesian people.

Technological progress, non-price factors competitiveness, and changes in trade income elasticities: empirical evidence from South Korea and Hong Kong

2020 ◽  
pp. 1-26
Author(s):  
Marco Flávio Cunha Resende ◽  
Vitor Leone ◽  
Daniele Almeida Raposo Torres ◽  
Simeon Coleman
Keyword(s):  
Growth Rate ◽  
Hong Kong ◽  
South Korea ◽  
Empirical Evidence ◽  
Technological Progress ◽  
Innovation System ◽  
Balance Of Payments ◽  
Income Elasticities ◽  
Long Run ◽  
Catch Up

In the balance-of-payments-constrained growth model literature, income elasticities (IEs) are considered as the crucial element determining a country's long-run growth rate. Although the extant literature accepts that technology matters for IEs magnitude, explanations linking technology and IEs magnitude are limited. In this paper, we make use of the National Innovation System (NIS) concept from the Evolutionary School to explain the channels through which the size of a country's IEs is influenced by the level of development of its NIS, which in turn is a channel through which the non-price competitiveness factors work. Additionally, we empirically test the hypothesis that the catch-up allowed by NIS developments achieved in South Korea and Hong Kong improved their IEs over the 1980–1995 period. Our empirical results suggest a link between the level of NIS development and the size of the IEs.

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