Forecasting the Future Consumption: A Case Study for Pakistan

This study examines the changes in household consumption expenditure pattern for Pakistan over the period 1997-2009, using data on household consumption expenditure from Household Integrated Economic Surveys (HIES) and Pakistan social and Living Standard Measurement (PSLM). This is a quantitative study concerning how household expenditure on different commodities changes when there are changes in income of household. Both total expenditure and income are used alternatively as explanatory variables. Also the formula for forecasting future consumption is used to find the future consumption for the next years. The method for used for estimating regression equation is Ordinary Least Square (OLS). Total expenditure elasticities are estimated by using double-log function type. Results show that consumption expenditure of all major consumption expenditure commodities has significant relationship with income.