Macroeconomic Dynamics on Rural and Urban Household Consumption Divide in BRICS Nations: A comparative study

Abstract

Objectives: Consumption as a whole in an economy is a function of income. In other words the household aggregate consumption in an economy largely depends on its Income. This study examines basically the consumption pattern at rural and urban level in BRICS nations. Methodology and Analysis: The study also evaluates the influence and relationship of macroeconomic variables on rural and urban consumption. For the purpose of the study, World Development Indicators (WDI) data from World Bank is used. The time series data of BRICS nations for a period from 1991-2014, on rural and urban consumption, and its relationship with variables like, Gross National Income (GNI), Industrial Production Rate (IPR), and Inflation Rate (IR), Bank Credit (BC), Bank Lending Interest Rate (BLIR) are analysed using Multiple Regression model and Co-integration analysis. Findings: From the above analysis it may be observed that there is divergence in the rural and urban household final consumption in BRICS nations before and after becoming as a group. There exists inequality in the influence of macroeconomic variables and their relationship between BRICS nations. Applications/Improvements: The analysis gives scope for further study of consumption pattern in other regions and can be improved by adding other influencing variables.