CROWDING OUT EFFECT OF INCREASED ELECTRICITY TARIFF ON HOUSEHOLD RESOURCE ALLOCATION IN PAKISTAN

This study aims to investigate the effect of the price increase of electricity on the well-being of households at various income levels. More precisely, the study endeavours to determine the crowding-out impact of increased electricity tariffs on households' budgetary allocation of resources to...

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Bibliographic Details
Published in:Pakistan journal of applied economics 2023-01, Vol.33 (2), p.211
Main Authors: Sohail, Fouzia, Naz, Lubna
Format: Article
Language:English
Subjects:
Crowding
Electricity
Expenditures
Households
Housing
Resource allocation
Tariffs
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Summary:This study aims to investigate the effect of the price increase of electricity on the well-being of households at various income levels. More precisely, the study endeavours to determine the crowding-out impact of increased electricity tariffs on households' budgetary allocation of resources to different income groups. This study uses the Household Income and Expenditure Survey (HIES) 2013-14 and 2018-19 to estimate the conditional Engel curves for eleven expenditure categories using the Quadratic Almost Ideal Demand System (QUAIDS). Results of the study show a significant difference in the composition of budgetary expenditures of households during the low tariff period compared to the high tariff period. An increase in the electricity expenditure leads to a fall in the budget shares devoted to education, health, housing, water, and fuel (other than electricity). This study reveals how frequent tariff reforms in the electricity sector burdened the limited household resources and thus impeded prosperity.
ISSN:0254-9204
2519-0431