Final Consumption Expenditure Research Articles

The Determinants of Imports of Goods and Services in European Countries in the Period 2010-2019

We estimate the determinants of imports of goods and services in 27 European Countries in the period 2010-2019 using data from AMECO with a model of 37 variables. We perform Panel Data with Fixed Effects, Panel Data with Random Effects, Pooled OLS and WLS. We found that among others, the imports of goods and services are positively associated with “Gross National Disposable Income”, “Compensation of Employees: Total Economy”, “Net Saving: Private Sector”, “Labour Share in Total Factor Productivity”. Results also show that the imports of goods and services are negatively associated, among others, with “Exports of Goods and Services at Current Prices”, “Harmonised Consumer Price Index”, “Gross Capital Formation at Current Prices: Total Economy”, “Final Consumption Expenditure of General Government at Current Prices”.

The relationship between human development and the cost of addictive goods in the regions of Russia

The study is aimed to establish the relationship between the indicator of the share of expenditures on alcoholic beverages in household final consumption expenditures and the value of the human development index. The object of research is the regions of the Russian Federation. The research is based on methods of the mathematical and statistical analysis of data of UNDP and Rosstat. Alcohol expenditures are decreasing in almost all regions against the background of the growth of the human development index. At the same time, half of the regions with a relatively low human development index have higher spending on alcoholic beverages and vice versa. In the Stavropol Territory and the Ivanovo Region, spending on alcoholic beverages is growing and there is a direct link with the human development index. The leaders in spending on alcoholic beverages are the Rostov Region, the Jewish Autonomous Region, the Kirov Region, the Murmansk Region, Karelia, the Kostroma Region, the Kaluga Region, the Komi Republic, the Khabarovsk Territory, and the Pskov Region. In these regions, except for Komi, against the background of high spending on alcoholic beverages, a relatively low human development index. In St. Petersburg with a high index of development, high expenditures on alcoholic beverages, in Moscow and the Republic of Tatarstan, also with a high human development index, expenditures on alcoholic beverages are average. North Ossetia, Dagestan, the Republic of Ingushetia, the Kabardino-Balkarian Republic, the Karachay-Cherkess Republic, the Chechen Republic have the lowest expenditures on alcoholic beverages among all constituent entities of Russia, but also relatively low human development index indicators. The regions with low expenditures on alcoholic beverages are also the Tambov Region, Novgorod Region, Ryazan Region, Republic of Adygea, Buryatia, Republic of Kalmykia, Republic of Altai, Magadan Region, Irkutsk Region, Ulyanovsk Region.

Dynamic Effects of Corruption on General Government Final Consumption Expenditure: Evidence from OECD Countries

The relationship of corruption with macroeconomic indicators and its widespread negative impact over the years has been the subject of many empirical studies. Public expenditures, which are among these macroeconomic indicators, are one of the fiscal policy tools and their size and amount can be alternated by policymakers who gain an advantage from corruption. In this respect, the effect of corruption on the government final consumption expenditure is interrogated by System Generalized Methods of Moment panel data analysis in this study. Using four different corruption indexes in terms of robustness check, and forecasting covering the 2002–2018 period for 37 OECD countries proclaim that the corruption indexes in 3 models are significantly and positively related to public expenditures, while the other corruption index is positively but insignificantly correlated.

GOVERNMENT SIZE AND ECONOMIC GROWTH IN KENYA: A MULTIVARIATE DYNAMIC CAUSAL LINKAGE

This study empirically examines the dynamic causal relationship between government size and economic growth in Kenya during the 1970-2017 period using the autoregressive distributed lag (ARDL) bounds testing approach. A multivariate Granger-causality model was used in order to reduce the omission-of-variable bias, which has been found to be associated with bivariate Granger-causality models. For this purpose, the study used domestic investment and trade openness as intermittent variables between government size (proxied by government final consumption expenditure) and economic growth. The results of the study are consistent with the Keynesian view as they reveal that, in Kenya, there is a distinct unidirectional causal flow from government size to economic growth - both in the short run and in the long run. This shows that, in Kenya, government expenditure Granger-causes real sector growth. Based on these results, policy makers in Kenya are recommended to pay special attention to the national government size when implementing growth-enhancing policies.

HEALTH CARE EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL APPRAISAL OF THE NEXUS

A nation’s wealth is often described in terms of their physical stock of capital per time for the promotion of economic growth. One of such physical stock of capital is a healthy labour force. Therefore, this study investigated the relationship between health expenditure and economic growth in Nigeria from 1985 to 2019. To determine this, annual time series data was collected from various issues of the Central Bank of Nigeria (CBN) statistical bulletin and the World Development Indicator (WDI). Stationarity, long run relationship, equation estimation and causality were determined using the Augmented Dickey Fuller (ADF), Johansen-Cointegration, Parsimonious Error Correction Mechanism (ECM) and Pairwise Granger Causality test respectively. The result showed that a long run relationship exist among the variables while the ECM showed that in event of a disequilibrium, the system would restore itself to equilibrium at an adjustment speed of approximately 85.5percent. The result uncovered that current and past percentage of health expenditure in total expenditure (PHETE), government final consumption expenditure (GFCE), and labour force participation (LABF) all had direct impact on national growth (real GDP per capita) while current and past number of infant deaths (NUFD) had inverse relationship with national growth. Result further showed that there exists a unidirectional causality running from NUFD to RGDPPC; from GFCE to RGDPPC; from LABF to RGDPPC, from NUFD to PHETE, from LABF to PHETE, from NUFD to GFCE and from NUFD to LABF. It was recommended that the federal government through the Ministry of Health should endeavour to encourage private-public partnership in the building of quality health infrastructure such as hospitals with state of art facilities in localities where standard health care centres are not accessible to working citizens.

The Analysis of Production Emission (Industrial EKC) and consumption emission: An Empirical investigation of STIRPAT model In Case of Pakistan.

This study investigates a long-term and short term association among climatic change due to industrialization in Pakistan by using ARDL technique for the time spanof 1990 to 2019. The Present study uses Industrial value added in its place of economic growth for EKC in case of Pakistan as the industrial sector is considered the key cause of carbon dioxide (CO2) emission. Besides that study used Population density, Nuclear energy, Households Final consumption expenditure and trade openness as independent variables. Empirical findings come out with U shaped EKC instead of Inverted U shape EKC in incident of Pakistan in short and in long run. This is because of consumption of modern technology and Nuclear energy consumption in Industrialization, i.e evident with negative association of Nuclear energy with carbon emission in short and in long run in Pakistan. Households Final consumption expenditure also shows significant and negative association, as income increases people use more advanced home appliances so carbon emission decreased. Being the most densed populated country of the world Population density is the significant contributor of carbon emission in case of Pakistan. Policy Implication for Pakistan is to control Population Pressure and to use of Nuclear power in Industrialization may reduce carbon emission.

Financial basis for the modern Russian economy

Subject. The article investigates the financial basis of the economy of contemporary Russia. Objectives. The focus is on identifying the financial basis of the modern Russian economy, the limits of economic activity, and conditions for economic development. Methods. The study rests on the systems approach, using the methods of statistical, neural network, and cluster analysis. Results. The paper unveils the need to study the financial basis of the modern Russian economy, which is caused by the duration of the transition from the socialist to capitalist socio-economic formation. The assessment of the growth rate of a wide range of statistical data reveals the financial basis of the modern Russian economy, i.e. direct investment, debt instruments, securities other than shares included in broad money, international liquidity, aggregate reserves, money supply. The existing financial basis limits the growth of gross value added, the increase in gross capital formation, etc. It also determines conditions for economic development, like high price of WTI crude oil and low price of gold, high gold price and the strength of the United States dollar. In the current structure of the Russian economy, both options lead to lower final consumption expenditure of the private sector and to limitation of stocks. Conclusions. The understanding of intermediate results of the long transition from socialist to capitalist socio-economic formation enables to define the boundary of the existence of the modern Russian economy. This boundary is generated by its raw material structure and financial basis.

Regional Disparities and Transformation of Energy Consumption in China Based on a Hybrid Input-Output Analysis

Different regions in China have different energy consumption characteristics and changing trends. This paper focuses on analyzing trends in energy consumption changes along the timeline for 30 regions in China. Using the Hybrid Input-Output Model, this paper decomposes energy consumption in 30 regions in 2007, 2012 and 2016 into energy embedded of final consumption expenditure, gross capital formation, inflow and outflow. We use these four dimensions as coordinates to draw a regional radar map. According to the changing characteristics of the radar map, 30 regions are divided into three groups. By analyzing the reasons for the changes in three regions, we draw the following conclusions. For regions where energy consumption is mainly inflow, the economically developed regions have to form a low energy consumption environment while achieving economic growth. The economically underdeveloped regions need to carry out energy conservation and emission reduction as well as ensuring the level of economic development. For some outflow regions with moderately economic development, it is necessary to balance the economic development and energy consumption control according to regional characteristics. For resource-rich regions which are in the process of transformation from agriculture to industrialization, they have to maintain the rapid development speed and strengthen their infrastructure with less energy consumption of buildings.

Financial wealth effects and consumption expenditure

AbstractThere has been a renewed interest in the wealth effects on household consumption expenditure mostly in the background of the global financial crisis and Eurozone turmoil. The available literature on wealth effects mostly focuses on advanced economies. Hence, this article studies the financial wealth effects on private final consumption expenditure (PFCE) in an emerging economy like India. We use the quarterly data for the period 1951–2015 and employ the ARDL method that has the flexibility in overcoming the econometric issues associated with the traditional methods in the analysis of time series models. The results suggest that financial assets wealth in the form of stock market capitalization (MC) significantly affects the PFCE. This article establishes the long‐run positive relationship between financial wealth assets and household consumption. The major inference is that households are closely linked with the financial markets through their investments in the form of insurance, mutual funds, company deposits, company stocks, and other forms. Hence their consumption behavior is significantly affected by the financial wealth created by the financial markets. The policy implication is to make the financial markets more transparent, easy to access by reducing the related financial intermediation costs leading to a deeper integration of the households with the financial markets, which in turn would result in increased financial asset wealth generation and consequently increased household consumption to boost economic growth.

Determinants of Regional Household Final Consumption Expenditure in Indonesia

The Indonesian economy, both at the national and regional levels, tended to experience a slowdown during 2010-2019. From the demand side, household final consumption expenditure (HFCE) is the primary cause of the slowdown. Therefore, various efforts are needed to maintain and improve HFCE. One of these efforts is to keep the stability of the macroeconomic factors that influence it. This research aims to reveal the determinants of regional HFCE in Indonesia. The determinants of HFCE were investigated using a dynamic panel data regression model with the first-difference Generalized Method of Moments (FD-GMM) approach and applied to data from 33 provinces during 2010-2019. The application of FD-GMM provides valid and consistent estimates. The results of the parameter significance test provide evidence that the lagged real HFCE, real gross regional domestic product (GRDP), and government spending have a significant positive impact on real HFCE. Meanwhile, both the inflation and unemployment rates had significantly negatively impacted. Thus, the role of policymakers in maintaining the stability of the five macroeconomic factors is necessary so that HFCE increases and the economy can grow even higher.

Sharing the safe operating space: Exploring ethical allocation principles to operationalize the planetary boundaries and assess absolute sustainability at individual and industrial sector levels

AbstractIn the light of increasing human pressures on the Earth system, the issue of sharing in the face of scarcity is more pressing than ever. The planetary boundary framework identifies and quantifies nine environmental boundaries and corresponding human pressures. However, when aiming to make the concept operational for decision support it is unclear how this safe operating space (SOS) within each of the planetary boundaries should be shared. This study proposes a two‐step approach, where the operating space is first downscaled to the individual level using ethical allocation principles and next scaled up to a higher organizational level using different upscaling methods. For the downscaling, three allocation principles are demonstrated: egalitarian (equal per capita); grandfathering (proportional to current share of the total impacts); and ability to pay (proportional to economic activity). For upscaling from the individual level final consumption expenditure is used as a proxy for the priority that the individual gives to the product or sector. In an alternative upscaling approach, an additional upscaling factor is based on the eco‐efficiency (ratio between turnover and environmental impact) of the product or sector. A demonstration of the method's application is given by applying the framework to two of the planetary boundaries, climate change and biogeochemical flows, with the Danish, Indian and global dairy sectors as cases. It is demonstrated how the choices of allocation and upscaling approaches influence the results differently in the three cases. The developed framework is shown to support an informed and transparent selection of allocation principles and upscaling methods and it provides a step toward standardization of distributing the SOS in absolute environmental sustainability assessments.

Country Attractiveness: Analysis of the Main Factors

Attracting investment is a relevant issue for any economy. The aim of the research is to study the factors affecting the inflow of foreign direct investment (FDI) by the example of countries leading in attracting FDI and countries of the Eurasian Economic Union (EAEU). The author uses both qualitative and quantitative methods to analyze research data of other authors, reports of international organizations and the World Bank database. The author did econometric calculations using the application package Stata 14. A linear regression model using the least-squares method was built. The author selected several factors that presumably affect FDI inflows to the EAEU countries. The calculations were based on the combined panel data analysis model used in the BRICS and MINT countries, which allowed the author to calculate the degree of influence and significance of a number of variables of FDI inflows. The study shows that political stability is more important than the inflation rate, the volume of foreign trade and final consumption expenditure. The author concluded that poor institutional development hinders investment. In particular, the negative institutional factors are non-transparent regulation policy, the dominance of public property and the lack of proper investment protection system, low degree of rule of law and limitation of economic rights. Further study of issues related to attracting FDI should consider the trends of mass digitization since the introduction and implementation of digital technology are becoming an integral part of the competitiveness of the modern economy.

Lockdown and GDP Contraction in India: A National Income Perspective

The present study derives an estimate of the contraction of the GDP in India during the lockdown period on the basis of the fall in the components of expenditure of the national income accounts. On the lower side the contraction is estimated to be around Rs. 7211.42 Billion per month at the constant 2011-12 prices during the total lockdown period in this quarter which is 58.08% of the GDP forecast had there been no lockdown. This translates into Rs. 10341.17 Billion per month at current prices. One important component of this study is the derivation of an estimate of the additional fall in the private final consumption expenditure of a large chunk of the Indian population who lost their means of livelihood during the lockdown period. This is called unemployment effect in the paper and is estimated by a method based on a counterfactual from the 68th Round of National Sample Survey data. The unemployment effect is found to be Rs. 712.59 Billion at 2011-12 constant prices for the quarter, which is a decline of 48% in private final consumption. This translates into a fall of Rs. 1021.54 Billion at current prices. The methodology proposed here is particularly useful for the developing countries where the extent of transactions are cashless/ digitized limited. The estimate of the contraction is, however, based on the currently available data, it can further be replaced by a better estimate as and when fresh data is made available.

Impact of Public Education Expenditures on Economic Wellbeing in Developing Economies

Education can affect economic growth and wellbeing through different channels like by increasing the efficiency of the workforce, reducing inequality, and increasing the knowledge and the innovative capacity of an economy. The key objective of the present research is to explore the impact of public education expenditures on economic wellbeing in developing economies. The present study explored the impact of public education expenditures on economic wellbeing by using panel dataset of 21 developing economies over the period of 1980-2014. Household Final Consumption Expenditure Per Capita was used as a proxy to measure economic wellbeing. The panel estimation technique of Generalized Method of Moments (GMM) was used for the analysis. Research findings revealed that there was a positive and significant relationship between education expenditure and economic wellbeing. Economic wellbeing of the society was directly linked with more priority to educational expenditures in public budget. Hence, developing economies should enhance their public spending on education.
 Keywords: Economics of Education, Public Education Expenditure, Economic Wellbeing, Household Final Consumption Expenditure per Capita, Developing Economies

Impact of Financial Development on Economic Growth and Export Promotion in Nepal

This paper explores the effect of financial development on economic growth and export promotion of Nepal using the time-series data from 1965 to 2018. The autoregressive distributed lag (ARDL) cointegration approach is used to analyze the data. In this study, financial development is measured using the credit by a bank (BNK), broad money (BMG), domestic credit to the private sector (DCP) expressed all as a percent of GDP. The control variables are final consumption expenditure (FCE), the annual increase in consumer prices (IFL), and trade to GDP (TRD). Exports of goods and services to GDP (EXP), and GDP per capita growth (ECG) are dependent variables. The effect of financial development on economic growth is statistically significant with the positive sign in both in short and long -run, but FCE is negatively significant. The impact of financial development on export performance including control variables IFL is statistically significant with a negative sign except for BRM only in the short-run; though, the TRD is positively significant. Indeed, the estimated results of the econometric estimation suggest appropriate policy corrections so that financial development can promote economic growth and export promotion.

Examining the nonlinear impact of selected macroeconomic determinants on FDI inflows in India

PurposeOver the years, India has witnessed irregular FDI inflows. Therefore, this study aims to explore the asymmetric impact of per capita income, final consumption expenditure, globalization index and exchange rate on FDI inflows in India.Design/methodology/approachUsing the nonlinear autoregressive distributed lag bounds framework and unknown structural break, the study investigates the impacts of selected macroeconomic variables in driving FDI inflows in India during the study period (1979-2016).FindingsThe outcomes of the study confirm the asymmetric relationship between FDI inflows and its determinants during the study period. The results have confirmed that the improvement in per capita income, private consumption expenditure, globalization index and currency value appreciation play a crucial role in increasing FDI inflows in India. In contrast, the downside movements in the volume of consumption expenditure, globalization index and depreciation of the currency value in relation to the trade partners result in reducing the volume of FDI inflows in the long run.Originality/valueFor determining FDI inflows, previous studies have considered the overall impact of its potential determinants, which may provide partial information about the phenomenon. The adopted nonlinear approach highlights that both the types of fluctuations (i.e. upside and downside) in the independent variables may affect FDI inflows differently and substantially. The nonlinear association between FDI and selected determinants may be vital in formulating a long-term policy.

Investigating the Determinants of Exchange Rate Stability: An Empirical Evidence

The major drivers of nominal and real effective exchange rates are investigated in a sample of 30 countries between 1977 and 2017. We used the multiple linear regression analysis by Fixed GLS AR1, and Pooled Mean Group (PMG). The main drivers of nominal exchange rate in the long run are found to be: broad money, interest rate, claims on central government, government final consumption expenditures, trade, inflation, GDP per capita, oil prices, school enrollment and the expected exchange rate, in the long run. While in the short run it is affected mainly by interest rate, general government final consumption expenditure, inflation, taxes, and the expected exchange rate. On the other hand, the main drivers of real effective exchange rate in the long run are found to be: current account balance, gross capital formation, trade, school enrollment, oil prices, total reserves, broad money, interest rate, claims on central government, government final consumption expenditures, GDP per capita, taxes, and the expected exchange rate. While in the short run it is only trade, unemployment rate, and the expected exchange rate.

Immediate and Long-Term Impacts of Africa – China Trade Intensity on Poverty Incidence in Africa

China remains a key international player in Africa, contributing much more than other countries to the trade and capital inflows to Africa. How these inflows have contributed to the prevailing poverty incidences and severity in Africa remain an empirical issue. The study investigated the short and long-run impact of Africa-China trade relations on poverty incidences using data from 1990 to 2017 for 20 African countries. To capture the linkage, the standard endogenous growth model was remodified to link poverty to trade between the selected African countries and China. The model was estimated using the dynamic and fully modified OLS techniques after establishing the time-series properties of the variables. The result of the analysis showed that the increased trade intensity between Africa and China has been beneficial to Africa and the evidence also confirmed that it is sustainable even in the long run. Export despite its meager size was a more significant contributor to poverty reduction than imports in the long run. It was also established that increased per capita income has greater significant impacts on poverty reduction in the long run. However, household final consumption expenditure was a major setback to poverty reduction in Africa both in the short and long run, Indeed, not only it aggravates poverty, it overwhelmed the alleviating potentials of both trade intensity and increase per capita income. The policy implication of the result is that better trade policy for increased exportation and increased domestic productivity in Africa are necessary for more improved efficiency of local production and increased per capita income over a long period

Dampak Pertumbuhan PDB Perkapita, Pengeluaran Rumah Tangga Perkapita, Perdagangan Terbuka dan Laju Populasi Perkotaan Terhadap Konsumsi Energi Akhir Perumahan

The purpose of this study is to investigate the impact of GDP per capita, household final consumption expenditure per capita, openness trade, and urban population rate towards residential final energy consumption in Indonesia using annual data over the period 1977-2016. We applied is unit root test, cointegration test, and estimation of short and long term relationships based on the Autoregressive Distributed Lag (ARDL) procedures. Our results show that GDP per capita, open trade, and urban population growth rate have a significant impact on residential final energy consumption, while household final consumption expenditure did not influence the growth of residential final energy consumption in Indonesia. Based on these findings, we concluded that the growth of GDP per capita, household consumption expenditures, openness trade and the rate of urban population are relevant indicators to predicting the growth rate of residential energy consumption in Indonesia.

Factors Shaping Cow’s Milk Production in the EU

The milk market in the European Union (EU) is adjusting rapidly to the removal of dairy quotas. The most important changes include increased milk yield per cow, increased total milk production, decreased number of cows, and the decreased milk consumption. The main aim of the paper is to examine the milk production changes in the EU. We investigated the dynamics of changes in farm milk production during the period from 1998–2017 in the EU. Moreover, we investigated the impact of the removal of quotas on the production of milk on farms in the EU countries for the period from 2015–2017. Milk production in the EU increased from 151 million tons in 1998 to 165 million tons in 2017 (a 10% increase). A multi-variate regression model was to test which explanatory variables have an impact on milk production in the EU. The most important factors were a gross domestic product, final household consumption expenditure (current prices, million euro), and population (number).