Consumer demand in Japan: An analysis using the Deaton-Muellbauer system

The Linear Approximate Deaton-Muellbauer system is applied to Japanese time series family budget data to analyze the consumer demand for 16 commodity categories. A good deal of similarities in the results between the present and previous studies are observed. Changes in demands per annum are attributed to the effects of changes in real income, relative prices and a time trend, revealing that the income effect is substantially greater in terms of an annual rate of change in quantity purchased than the substitution effect for many commodities. Economic growth policy is very important and statistically significant for the expansion of domestic demand and imports. Further commodity-specific research is required.