An analysis of the Japanese expenditure pattern: An application of a dynamic linear expenditure system to the 1961-1982 data

We estimated a dynamic linear expenditure system for 22 subgroups of commodities using a time series of the Japanese family budget data for the last 22 years, and analyzed the factors affecting the changing demands. The proxy for changing tastes was specified as the square of time, taking into account accelerated effects of time trend on expenditures. It would reflect an acceleration of modernization in the mode of living. A demand matrix was established and the effect of changing tastes on each subgroup was measured in an annual rate of shift in demand. Policy implications of the results are discussed in some detail to obtain the long-term prospects for the supply of food commodities in particular.