Although economic theory indicates that services are income elastic, empirical evidence on this issue has not been conclusive. Using time series data from 1965 to 1996, this paper attempts to test whether consumer's demand for services is income elast...
Although economic theory indicates that services are income elastic, empirical evidence on this issue has not been conclusive. Using time series data from 1965 to 1996, this paper attempts to test whether consumer's demand for services is income elastic in Singapore. Unlike in other studies, the stationarity of the macro economic variables used in this analysis is tested to obtain more reliable estimates. The empirical results show that demand for services is not income elastic in Singapore. [C12, C22]