Private Consumption Expenditure Research Articles

The Impact of Coronavirus Pandemic on Private and Public Consumption Expenditure

The Impact of Coronavirus Pandemic on Private and Public Consumption Expenditure

Did the Economic Reforms Change the Macroeconomic Drivers of the Indian Economy in the Post-Reform Era? An ARDL Bounds Test Approach

Purpose: The purpose of this study is to investigate the macroeconomic forces that have been driving the Indian economy during both the pre-reform and post-reform eras, that is, from 1950-1951 to 1990-1991 and from 1991-1992 to 2022-2023 respectively. 
 Problem: The Indian economy underwent significant economic and financial sector reforms in 1991-92, with the goal of reviving its stagnant growth. These reforms are intended to spur the economic growth of India. What were the main forces behind the Indian economy before and after the reforms? Is the research question. The goal of the current study is to determine if the economic reforms shifted or maintained the pre-reform era’s driving forces for the Indian economy in the post-reform era. 
 Design/Methodology/Approach: The gross domestic product (GDP), the gross domestic savings (GDS), the private consumption expenditure (PFCE), the government final consumption expenditure (GFCE), the inflation rate, the exchange rate, the exports, the imports, the internal and external borrowings of the government, personal remittances, foreign direct investment (FDI), and foreign portfolio investments (FPI) are all taken into consideration in order to fill the research gap that has been identified as a result of the comprehensive review of the literature. Following an analysis of the selected variables' fundamental characteristics, an econometric model is developed using the Autoregressive Distributed Lag (ARDL) Bounds Test Model. 
 Findings: There is no evidence of long-run causation and association between the variables, but the findings of the ARDL Bounds Test showed that in the pre-reform period, PFCE is the major driver of the GDP in the short-run, with strong support from imports. However, since the reform, PFCE, GDS, and Exports are the primary short- and long-term contributors to GDP. 
 Practical Implication: These findings indicate that India's macroeconomic system is shifting. The Indian economy has undergone a dramatic shift, moving away from a reliance on imports and toward one that is consumer-driven and export-driven. As savings and consumer expenditures are the main drivers of the Indian economy’s growth in the post-reform era, policies should be designed to increase savings and consumption as well as increase exports.

Import Dependence of Exports, Aggregate Demand and Income Distribution in the Turkish Economy: A Post-Keynesian Econometric Analysis

This study aims to investigate the impact of import dependence on exports on the relation between aggregate demand and functional distribution of income in the Turkish economy. To achieve this, the model proposed by Stockhammer, Hein, and Grafl (2011) was employed and applied to the Turkish economy throughout 1988-2019. The findings indicate that the demand regime was wage-led in Türkiye throughout the sample period, and the integration of import content of exports into the analysis renders the demand regime even slightly more wage-led. Subperiod analyses show that even though the negative effect of a higher labor share in total income on net exports has doubled in absolute value from the 1995-98 subperiod to the 2008-18 subperiod, the positive effect of a higher labor share on private consumption expenditures did not only counterbalance but exceeded it, while its negative effect on private investment remained relatively small and constant over the subperiods. Our findings also show that the integration of import content of exports into the analysis also rendered all the subperiods moderately more wage-led.

Empirical Analysis of the Trade Balance and its Determinants in Sri Lanka

Every economy has experienced an expansion in international trade in recent years, and some developing countries frequently experience persistent trade deficits. The investigation of the short-term and long-term relationships between trade balance and its macroeconomic determinants is the main goal of this study. In particular, the study explores the impact of the real exchange rate, foreign direct investment, inflation, budget deficit, private consumption, real money supply, and gross domestic product on the trade balance. For this purpose, the paper employed an autoregressive distributed lag (ARDL) bounds test co-integration model that covered the period from 1980 to 2020. The data were mainly gathered from the annual reports of the Central Bank of Sri Lanka, the World Development Indicators, and the UNCTAD database. The findings show a co-integration between the trade balance and selected macroeconomic variables. The study found that real exchange rate and foreign direct investment have a statistically significant and positive association with trade balance, indicating these two determinants will improve the trade balance in the long run. The real exchange rate balances the trade deficit following currency devaluation through expansion in real exports and collapse in real imports. The real exchange rate, however, is insignificant, with positive signs in the short run indicating that Sri Lanka has no J-curve effect. Further, the results demonstrate that in the long run, the budget deficit, private consumption expenditure, and real money supply have a negative impact on the trade balance. However, there is no evidence that inflation and trade balance are related over the short and long term. The results of this analysis suggest that the government should focus on exchange rate policy, followed by monetary and fiscal policies, in order to improve Sri Lanka's trade balance.

Determinants of Private Consumption Expenditure in Egypt: ARDL Study

This paper studies the relationship between private consumption expenditure and independent variables that include GDP, population number, interest rate, and inflation rate in Egypt during the period from 1955 to 2022 using the Autoregressive Distributed Lag Model (ARDL). The research also aims to study the effect of displacement between private consumption spending and government consumption spending using a model (ARDL). The study found that there is a positive and significant relationship between private consumption spending and both output and population in the long run. In the long run, a 1% increase in GDP is associated with a 0.8% increase in private consumption spending, and a 1% increase in population is associated with a 0.3% increase in private consumption spending. However, there is an inverse and significant relationship between private consumer spending and both interest rates and government consumer spending in the long run. In the long run, a 1% increase in the interest rate is associated with a 0.2% decrease in private consumption spending, and a 1% increase in the inflation rate is associated with a 0.1% decrease in private consumption spending. In the short term, there is a positive and significant relationship between private consumption spending and both output and population. In the short term, a 1% increase in GDP is associated with a 0.6% increase in private consumption spending, and a 1% increase in population is associated with a 0.2% increase in private consumption spending. However, there is an inverse relationship between consumer spending Private and short-term interest rate. In the short term, a 1% increase in the interest rate is associated with a 0.1% decrease in private consumption spending. The findings of this study suggest that the central bank can use monetary policy tools in order to influence the intermediate objective of monetary policy and influence private consumer spending and aggregate demand. Taxes can also be used as one of the fiscal policy tools to influence disposable income in order to change private consumer spending and aggregate demand.

ANALISIS PENGARUH PENGGUNAAN TRANSAKSI NON TUNAI ELEKTRONIK DAN DAYA SUBSTITUSINYA TERHADAP TRANSAKSI TUNAI DI INDONESIA

Electronic non-cash transaction is an innovation of payment methods. E-money is one of its popular forms. An electronic non-cash transaction using e-money has more advantages than using cash transaction. These advantages make e-money transaction keep increasing. Currently, the increment in e-money transactions has also been accompanied by a decreament in the amount of cash transaction, even though the nominal is still small. This study aims to analyze the effect of electronic non-cash transaction instruments on cash transaction in Indonesia.The dependent variable in this study is cash transactions, the value of cash transactions in this study uses an approach from data on the amount of Gross Domestic Product (GDP) and the value of non-cash transactions (e-money). The independent variables is electronic non-cash transaction proxied by e-money users, number of reader machines, nominal e-money transactions, nominal clearing transactions, and nominal BI-RTGS transactions as a proxy for electronic non-cash transactions. Macroeconomic factors are also added to this study as independent variables, such as GDP, private consumption expenditure, BI interest rate, and inflation rate. This research uses quantitative methods using time-series data from January 2015 to June 2020. The data analysis method used in this research is the Engle-Grangel cointegration test and the error correction model (ECM).The results of the study shows that the number of users and the nominal of e-money transactions as a proxy for electronic non-cash transactions are able to substitute cash transactions in Indonesia in the long-run. While in the short-run, just the nominal of e-money transaction as a proxy for electronic non-cash transactions are able to substitute cash transactions in Indonesia.

Substitution Between Private and Government Consumption in a Currency Area: The Case of the CFA Franc Zone

The current study aims at investigating the relationship between private and government consumption within CFA franc zone. In fact, since the decade 2000, most of these countries have launched ambitious spending programs in order to become emergent in the 2035 horizon. For this aim, we applied the cointegration approach of Ogaki (1992) and Ogaki and Park (1997) using panel data and country level analyses for the period 1985–2019. Results from the two methodologies indicate that private consumption and public expenditure are better described as Edgeworth-Pareto substitutes. Conventionally, this means that an increase in government spending decreases the marginal utility of private consumption. Consequently, fiscal stimuli in CFA franc countries are harmful since they crowd out the private consumption. However, in case these countries have to face a fiscal consolidation, the substitutability pattern between private and public consumption is likely to moderate the contractionary impact of cuts in government consumption.

Determinants of Private Consumption Expenditure in Egypt: ARDL Study

Determinants of Private Consumption Expenditure in Egypt: ARDL Study

Impact of Deficit Financing and Trade Openness on Private Consumption in India

The Ricardian equivalence hypothesis claims that private consumption is neutral to the fiscal deficit and its mode of financing (debt vs tax). The study reinvestigates the Ricardian equivalence hypothesis in India by taking private consumption as the dependent variable, whereas government expenditure, government debt, tax, domestic income, and trade are considered as independent variables. In the Indian context, the Ricardian view raises an interesting point. If the Ricardian equivalence holds in the Indian economy, households alter their spending patterns and consequently increase their savings, making the policy changes ineffective. The autoregressive distributed lag (ARDL) bound testing approach was applied to the annual time series data from 1988 to 2021. The estimates confirm a significant long-run and short-run relationship between the variables; the results reject the Ricardian Equivalence and propound the Keynesian approach that the mode of financing the fiscal deficit (debt vs tax) does matter to the private consumption expenditure. The estimates also assert the long-run relation between trade openness and private consumption spending. The positive and significant coefficient shows that an open economy leads to an increase in consumption, which indirectly supports the Compensation Hypothesis. Given that deficit financing and trade openness have a substantial influence on India’s consumer spending, it can be concluded that expansionary fiscal and liberal trade policies should be carefully devised and supported. This study contributes to the existing literature on the Ricardian equivalence and trade openness by presenting new evidence on designing sustainable fiscal policy by spending wisely without imperilling the country’s consumption expenditure and global presence.

From Shopping to Statistics: Tracking and Nowcasting Private Consumption Expenditures in Real-Time

From Shopping to Statistics: Tracking and Nowcasting Private Consumption Expenditures in Real-Time

The Effect of Housing Assets on Private Consumption Expenditures in Iran

The purpose of this study is to measure and analyze the effect of housing assets on private sector consumption using time series data in Iran for 1991-2021. This study analyzes the relationship in the form of a autoregressive distributed lag (ARDL) econometric model using Eviews software. The final trend for short- and long-term consumption of permanent income, housing and financial assets is also obtained. It is 0.55 and 0.69 for permanent income and 0.56 and 0.70 for housing, respectively. The error correction model shows the adjustment of short-term disequilibrium with a coefficient of 0.48, which is a reasonable relative adjustment rate. Another result of this study is the positive insignificant effect of financial assets on private consumption in Iran

Influence of Government Expenditure on Economic Growth: An Empirical Retrospection Based on ARDL Approach

The study investigates the influence of government expenditure (GE) on Oman’s economic growth by examining different government-spending dimensions as predictors of economic progression based on collected time-series data of Oman for 30 years. The study uses ‘Auto-Regressive Distributed Lag’ (ARDL) to assess the short-range and long-term effects of the dimensions on economic growth. GE, personal consumption expenditure and public debt are significant negative predictors of Oman’s economic progress in the long run. However, government and private consumption expenditures (PCEs) are significantly negative in the short run. Gross domestic investment is not a significant predictor in the long run, whereas public debt is a substantial positive predictor of Oman’s economic growth in the short run. The study will help policymakers recognize GE in Oman’s economic progression and development.

Mali Konsolidasyon Programlarının Özel Tüketim Harcamaları Üzerindeki Etkisi: PIIGS Ülkelerine Yönelik Panel Veri Analizi

Bütçe dengesinin çeşitli nedenlerle bozulması sonucunda dengenin tekrar kurulması amacıyla mali konsolidasyon programları uygulanmaktadır. Mali konsolidasyon, kamu açıklarını ve borç stokunu azaltmaya yönelik uygulanan daraltıcı maliye politikaları olarak tanımlanmaktadır. Çalışmada, mali konsolidasyon programlarının özel tüketim harcamaları üzerindeki etkisi 1995-2020 yılı verilerine dayalı olarak PIIGS (Portekiz, İtalya, İrlanda, Yunanistan, İspanya) ülkelerini içeren panel veri analizi ile ortaya koyulmuştur. Elde edilen bulgular ışığında mali konsolidasyon programlarının ülkeler arasında farklı etkiler oluşturduğu görülmüştür. İrlanda ve İtalya’da genişletici mali daralma hipotezini destekleyici bulgular elde edilmiştir. Yunanistan’da ise Keynesyen etkileri destekleyen sonuçlara ulaşılmıştır. Örneklem yıllarından olan 2019-2020 yıllarında yaşanmış olan ve çalışmaya dahil edilen Covid-19 salgını nedeniyle uygulanan hükümet programlarının ise Portekiz, İtalya ve İrlanda’da özel tüketim harcamalarını olumlu etkilediği görülmüştür. Bu durum mali konsolidasyon dönemlerinde genişletici mali daralma hipotezinin; genişleme dönemlerinde ise Geleneksel Keynesyen modelin geçerli olabileceğini göstermektedir.

Exploring the Empirical Linkages between Economic Growth and Private Consumption: Contextual Evidence from Pakistan

The sustainable development of a country is assumed to be a healthy sign for domestic consumers as well as producers. As private consumption is a vital component of real gross domestic product (GDP) and it can influence economic growth. This study explored a dynamic relationship between economic growth represented by real GDP and real private consumption expenditure (PCE). Stationarity of private consumption expenditure and GDP in first differences led to cointegration analysis between these time series data. Cointegration test indicated the existence of co-integrating relationship between these two variables. Vector error correction model (VECM) was employed to test the possibility of long-run adjustment towards equilibrium as well as nature of short-run dynamics. Granger causality test shows plausible role of short run consumption dynamics significantly improve predictive power of the model for real GDP growth.

GROWTH IMPACT OF SAVINGS ON THE NIGERIAN ECONOMY

<p>Savings in an economy can assume one of the several forms. These includes: Personal savings, corporate savings or business savings and Government savings. This study evaluated growth impact of savings on the Nigerian economy. The study specifically examined the effect total savings, private consumption expenditure, gross fixed capital formation and core credit to the private sector on the gross domestic product of Nigeria. Data for the study were sources from CBN statistical bulletin for a period of ten (10) years spanning through 2011 to 2020. The sourced data were analysed using multiple regression analysis, result of the analysis shows that total savings has positive and significant effect on the gross domestic product of Nigeria. It was also observed that private consumption expenditure has a negative and insignificant effect on the gross domestic product of Nigeria. The study further revealed that gross fixed capital formation has a negative and significant effect on the gross domestic product of Nigeria. It was also observed that core credit to the private sector has positive and significant effect on the gross domestic product of Nigeria. Based on the findings, the study recommends that the government should set a sound and fertile environment in order to foster domestic saving that will help to increase the level of economic growth in Nigeria. Government should increase the deposit rate of the deposit money banks in Nigeria through monetary policy. Government should transform the financial sector of the country. Government should create favorable condition in order to mobilize domestic savings from the small depositors.</p><p>JEL: D01; D31</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0987/a.php" alt="Hit counter" /></p>

The Impact of Inflation Rate on Private Consumption Expenditure and Economic Growth—Evidence from Ghana

The effect of inflation on an economy has far-reaching implications. One of the most significant effects of inflation is the uncertainty created when the inflation rate is fluctuating, which can reduce or increase consumer purchasing power. The study employed the Engle-Granger Cointegration, error correction, and granger causality as estimation techniques to determine the association between inflation rate and private consumption expenditure. In this study, using the ordinary least square econometric method, the study empirically assessed the impact of inflation on private consumption expenditure and economic growth between 1990 and 2020. The data were first analyzed using the Augmented Dickey-Fuller (ADF) test which indicates that all the variables of interest were stationary after their first differencing. The study found a cointegration relationship between private consumption expenditure, inflation rate, interest rate, and gross domestic product rate. The study found that in the long run, INF has a negative significant effect on PconX, while INTR and GDPR have positive significant effects on PconX. The study’s empirical findings show that there is a long-run negative significant relationship between inflation and private consumption expenditure in Ghana, meaning that private consumption expenditure in Ghana reduces on products and services during periods of high inflation than during periods of low inflation”. According to the findings, inflation expectations have a detrimental impact on private consumption expenditure attitudes, particularly among consumers in a very favorable financial situation. Furthermore, since the global financial crisis, the importance of inflation expectations has grown. The results for consumption expenditures are quite evident and difficult, particularly when compared to the results for interest rates and economic growth, as they imply a positive and relatively strong relationship to inflation. As a result, based on the findings of the study, the research advised that the government should provide low and stable prices at all times to prevent the negative impact of inflation on private consumption. Also, it was advised that the government, in collaboration with the Bank of Ghana, formulate and implement prudent fiscal and monetary policies aimed at stabilizing macroeconomic factors to boost economic growth.

أثر سياسة التقشف التوسعي على الناتج المحلي الإجمالي: حالة مصر Impact of expansionary austerity policy on GDP: Egypt

تهدف الدراسة إلي اختبار فرضية التقشف التوسعي في الاقتصاد المصري، أي قياس أثر سياسات التقشف المالي في الاقتصاد المصري علي النمو الاقتصاد المصري، ولاختبار مدي صحة تلک الفرضية تم تقدير معادلة النمو الاقتصادي في الاقتصاد المصري، تم استخدام بيانات سنوية عن الفترة (1980-2017)، وتم الاعتماد علي نموذج المعادلة الواحدة من خلال استخدام معادلة انحدار متعدد للنمو الاقتصادي، وکانت محددات النمو الاقتصادي التي تم استخدمها کمتغيرات مفسرة مستقلة للنموذج هي: الإنفاق الاستهلاکي الخاص، والإنفاق الاستثماري الخاص، والإنفاق الحکومي بشقيه الاستهلاکي والاستثماري، وصافي التعامل مع العالم الخارجي، والضرائب، وقد تم اختبار جذر الوحدة لمعرفة مدي استقرار السلاسل الزمنية باستخدام اختبار فيلب بيرون، واتضح من نتائج اختبار فيليب بيرون أن جميع السلاسل الزمنية لکل من الناتج المحلي الإجمالي الحقيقي، والإنفاق الاستهلاکي الخاص الحقيقي، والإنفاق الاستثماري الخاص الحقيقي، والإنفاق الحکومي الحقيقي بشقيه الإستثماري والخاص وصافي التعامل مع العالم الخارجي وقوة العمل، مستقرة عند أخذ الفروق الأولى لها سواء بإفتراض وجود مقطع أو وجود مقطع واتجاه عام، عند مستوي معنوية1%. کما توصلت نتائج الدراسة الي عدم فاعلية التقشف المالي التوسعي في تحفيز الناتج المحلي الإجمالي الحقيقي في الاقتصاد المصري، وقد يرجع هذا لأن الإنفاق الحکومي في الإقتصاد المصري يرکز علي البنية التحتية، الأمر الذي يقلل من أثر مزاحمة القطاع الحکومي للقطاع الخاص، بالإضافة إلي وجود موارد معطلة في الاقتصاد المصري، الأمر الذي يعني أن ارتفاع الإنفاق الحکومي محفز للنمو الاقتصادي في الاقتصاد المصري ومن ثم عدم فاعلية سياسات التقشف التوسعي في الاقتصاد المصري. The study aims to test the hypothesis of expansionary austerity in the Egyptian economy, ie to measure the impact of fiscal austerity policies in the Egyptian economy on the growth of the Egyptian economy. To test the validity of this hypothesis, the economic growth equation in the Egyptian economy was estimated. Annual data were used for the period (1980-2017),The single equation model was relied on by using a multiple regression equation for economic growth. The determinants of economic growth that have been used as independent explanatory variables for the model are: private consumption expenditure, private investment spending, government spending in both consumption and consumption, net dealing with the outside world, taxes, The root of the unit was tested to determine the stability of the time series using the Philip Peron test. The results of the Philip Peron test showed that all the time series of real GDP, real private consumption expenditure, real private investment spending, real government spending in both investment and private sectors and net dealing with the outside world and the labour force stable When taking the first differences, either assuming intercept or intercept and trend, at the level of significance of 1%. The study also concluded that expansionary fiscal austerity is not effective in stimulating real GDP in the Egyptian economy. This may be due to the fact that government spending in the Egyptian economy focuses on infrastructure, which reduces the impact of crowding out the government sector to the private sector, in addition to the existence of idle resources. In the Egyptian economy, this means that high government spending is a catalyst for economic growth in the Egyptian economy and hence the ineffectiveness of expansionary policies in the Egyptian economy.

Fiscal Decentralization and Macroeconomic Outcomes in Nigeria

This study examined the fiscal decentralization-economic growth nexus in Nigeria, with the objective of establishing the causal relationship between measures of fiscal decentralization and economic growth covering the period 1981-2019. Employing the autoregressive distributed lag (ARDL) technique of econometrics, the analyses revealed that fiscal decentralization variables employed in the study vis-a-vis federal government, state government and local government expenditures have a positive and significant impact on economic growth in Nigeria except for local government expenditure which was not significant at any level. This behaviour is adduced to be a function of poor governance, corruption and other underlying structural challenges at that level. Also, it was observed that while real GDP has a positive and significant impact on private consumption expenditure, its impact on unemployment was not significant at any level. The study therefore concludes that the nature and pattern of growth in Nigeria has not been inclusive. Consequently, it is recommended that fiscal relations governing the different tiers of government be reviewed to meet existing realities while coordinated fiscal policy measures and improved governance will enhance growth and the fiscal space in the country.

Consumption Expenditures as Key Drivers of Economic Growth and Manufacturing Expansion in Nigeria

This study has two goals: first, to investigate the effects of private and government consumption expenditures as well as imports and exports on economic growth in Nigeria. Second, to analyse the implications of these expenditures for manufacturing sector expansion given the special growth-enhancing properties of manufacturing as articulated in the theoretical and empirical literature. Our estimations of the three models specified for the study are based on the Nigeria time-series data from the World Development Indicators database between 1981 and 2019 using Pesaran’s ARDL regression methodology after testing the trend properties of the series. The validity and reliability of regression results were certified by the regression diagnostics.Our findings support significant positive effects of private consumption expenditure and exports on economic growth while government consumption expenditure and imports exert a significant negative impact on growth. These two expenditures that grow the economy neither significantly expand nor decrease manufacturing as the positive impacts of private consumption expenditure and the negative impacts of exports were insignificant. The negative effects on manufacturing of government consumption expenditure and imports were not significant. However, economic growth was found to significantly expand manufacturing activities. We conclude that over two-thirds of Gross Domestic Product expenditures constitute a leakage from the economy being insignificant to drive manufacturing expansion. The resultant loss of the flow of growth-enhancing externalities from manufacturing to other sectors of the economy may constrain future economic growth or cause the economy to grow in an unsustainable manner. Keywords: consumption, government expenditure, economic growth, manufacturing, exports. DOI: 10.7176/DCS/11-1-05 Publication date: January 31 st 2021

Impact of Public Debt, Lending Interest Rate, Public Spending and Money Supply on Private Consumption in South Asian Countries: An Econometric Analysis

The public debt of South Asian countries has witnessed a continuous increase from the last three decades which has badly affected the household private consumption expenditures. High public debt can lead to steep losses for banks, both domestic and international, undermines the stability of financial systems in both the crisis-hit country and others. This can hit economic growth as well as private consumption. The purpose of this study is to examine the impact of public debt on private consumption in South Asian countries i.e. Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Besides public debt, the impact of some other important macroeconomic, fiscal, and monetary variables like lending interest rate, public spending and money supply have also been examined. For this purpose, 31 years of panel data from 1990 to 2020 of South Asian countries have been taken. The study has used a variety of econometric techniques like Robust Least Square Regression, Panel Cointegration, Error Correction Model (ECM), Wald test, and Panel Fully Modified Least Squares (FMOLS) approach to examine the short-run and long-run relationship among the variables. The results of Robust Least Square Regression indicate that public debt discourages private consumption. The lending interest rate also badly affected private consumption. The other variables like public spending and money supply have a favorable impact on private consumption. The results of the Kao Residual Panel Cointegration Test and the Johansen Fisher Panel Cointegration Test indicate that there exists a long run relationship among the variables. The results of the ECM and Wald Test reveal that a long run and short-run causality is running from independent variables to the dependent variable respectively. The study recommends that by using monetary and fiscal policies effectively the private consumption and economic growth can be stimulated in the economy. Keywords: South Asia, Public Debt, Private Consumption, Lending Interest Rate Public Spending, Money Supply, Robust Least Square Regression, ECM, FMOLS, Wald Test.