Determinants of regional consumption disparities in Turkey and statial analysis

This study investigates differences in households'consumption patterns in 26 regions of Turkey (NUTS Level 2) and for 12 main consumption groups for years 2005-2013 by using TurkStat Regional Dataset. The regional differences in consumer behavior are modeled via Linear Approximation of the Almost Ideal Demand System (LA/AIDS) by Deaton and Muellbauer (1980) and demographic variables are introduced to system using translation method by Pollak and Wales (1981). To estimate models, Augmented mean group estimator technique is employed on panel regressions. Within the context of the study, expenditure and own price elasticities are calculated separately for each of 26 regions and 12 main consumption groups. Then, the results are reflected on Turkey's map to carry out spatial analysis and regional disparities in each of main item groups are evaluated. Based on results of expenditure elasticities, one can conclude that consumption pattern for goods in food, alcoholic beverages and tobacco, clothing, health, communication, education, and miscellaneous groups in western areas are the same as consumption pattern of those in eastern areas. However, consumption pattern for housing, furniture, transportation, recreation, and restaurant and hotel commodity groups, are different in the west and the east. On the other hand, results of own-rice elasticity reveal that households' responses to price changes for food, alcoholic beverages and tobacco, health, communication, education, and miscellaneous commodity groups are the same in western and eastern areas. However, it is observed that demand for items of clothing, housing, furniture, transportation, recreation, and restaurant and hotel groups differs for regions in the west and in the east.