Search results

This study aims to examine the consumption behaviour in Organization of Islamic Cooperation countries.

Using time series and panel data, this study estimates rational expectations permanent income hypothesis model and the intertemporal elasticity of substitution, and examines the response in consumption to expected and unexpected changes in income.

The evidence supports the phenomenon of loss aversion. The response of consumption to unexpected income changes is statistically significant in only one-third of the countries in the sample. Conversely, the response of consumption to expected income changes is statistically as well as economically significant in one-fourth of the countries in the sample. The intertemporal elasticity of substitution is also statistically insignificant in majority of OIC countries in the sample.

The evidence in support of loss aversion in preferences could help in explaining the low penetration of equity-based risk sharing instruments in Islamic finance.

The excess sensitivity of consumption to income suggests that redistribution efforts to enhance incomes of poor households could help in enhancing their consumption levels.

The study takes a comprehensive sample across time and space for OIC countries as compared to previous studies and also adjusts the budget constraint for Zakat.

This study aims to investigate the impact of local windfall gains from the Spanish Christmas lottery on household consumption behavior.

The study applies differences-in-differences to assess permanent income hypothesis (PIH) validity, examining pre- and postlottery consumption effects. Additionally, it also uses an instrumental variable regression, using the lottery shock as an instrument for total expenditures, to estimate the Engel curves.

The paper finds a PIH violation; households in winning region notably increase consumption on durable and nondurable goods compared to nonwinning ones. Moreover, durable goods consumption is responsive to lottery winnings, while nondurable goods consumption are unit-elastic to expenditure shocks.

To the best of the author’s knowledge, this is the first paper analyzing the effects of winning regions of the Spanish Christmas lottery in all types of consumption goods, testing its consequences in the PIH and estimating its effects in the Engel curves.

Using a sample of developed and developing nations (including China and Hong Kong), this study examines the financial market and housing wealth effects on consumption. Housing performs the dual functions as both a commodity providing a flow of housing services and an investment providing a flow of capital income. With an empirical framework based on the permanent income hypothesis, this study's findings suggest that a rise in housing price has both a positive wealth effect and a negative price effect on consumption. While the positive wealth effect is caused by an increase in capital income from housing investment, the negative price effect is caused by an increase in the cost of consuming housing services. Moreover, the sensitivity of consumption to unanticipated changes in housing price is related to the level of financial and institutional development.

The paper aims to examine the consumption behavior of Chinese residents during economic transition. It explores whether Western theories of consumption are applicable to the Chinese situation, and then tests the hypothesis based on Chinese traditional culture and dynamic nature of system change.

The paper opted for an empirical‐based approach. A regression model was used to analyze annual consumption data from 1986 to 2008 in China.

The paper provides empirical insights and suggests that under the influence of Chinese traditional culture and dynamic change of the Chinese economic system, Chinese urban residents exhibit a special consumption pattern of an intermittent and cyclical nature.

The paper concludes that in order to make the consumption stimulation policy in China more effective, it is necessary to establish a series of measures such as establishing a sound social welfare system as well as narrowing the gap between the rich and the poor, which will substantially increase the buying power of the less‐privileged groups and thus will increase the overall spending in the society. Although the econometric model used in this paper is adequate, a different approach like time series econometrics may give us additional insights. Researchers are encouraged to test the hypothesis further by employing other methodologies. Second, due to the lack of its own theories in the emerging market, this study remains exploratory.

This paper fulfils an identified need to study the special consumption behavior of Chinese urban residents during the economic transition.

The purpose of this paper is to discuss how reproductivity (child‐rearing) fits into ethics. It aims to use objectivist ethics (OE) specifically as the framework for considering this.

The approach is conceptual in nature. Economic concepts are used to analyze and extend an ethical issue and the cardinal values within OE, which includes productive purpose, are reviewed.

The paper argues that reproductivity is sufficiently different from productivity to be a separate category. Then using the trader principle, the objectivist case for inheritance, and capital theory, the case is made that reproductivity is required of each person in the same sense that productivity is.

This is an original argument made by the author in Then Athena Said: Unilateral Transfers and the Transformation of Objectivist Ethics. In that work, reproductivity is linked to human capital replacement, depreciation, the sinking fund, and Irving Fisher's conception of standard income. This paper also relates it to permanent income. Also, the conclusions are more inclusive than those in the previous work in that other forms that the replacement of human capital can take in addition to reproduction are considered.

This study aims to investigate the main drivers of private saving in Egypt (2005–2020).

It employs an autoregressive distributed lag (ARDL) approach for quarterly data on private saving, lagged private saving, real gross domestic product (GDP) growth, public saving, inflation, real interest rate, money supply, current account deficit and unemployment.

Private saving in Egypt displays persistency and public saving depresses private saving in the short run and long run. Real interest rate, inflation and unemployment have negative and statistically significant impacts on private saving in the short run and long run. The current account deficit displays a negative effect on private saving but is significant only in the short run. Other incorporated variables, like real GDP and money supply, are not statistically significant. This could be attributed to the high consumption rather than saving motive of the Egyptian population and their tendency to rely more on other informal saving channels.

Findings are of policy relevance as unleashing the determinants of private saving guides policymakers in formulating the appropriate sustainable development policies. It also assists in identifying the main obstacles hindering the promotion of private saving and hence major areas for policy intervention, like financial inclusion, poverty eradication, employment generation and structural reforms.

This study contributes to the literature: (1) it tackles private saving figure rather than aggregate saving figure that is covered by similar studies due to lack of consistent data, (2) given the relatively low quality, unavailability and inconsistency of data on private saving in developing countries, investigating the determinants of private saving should be carried out on an individual country basis which is done by this study, (3) this study fulfills the gap in literature related to the lack of up-to-date studies on private saving in Egypt and (4) it relies on quarterly data that could produce more reliable results.

The persistent increase in household indebtedness is an alarming issue that is becoming a major concern for economists and governments in developing nations. Although household consumption is an essential source of economic growth, households’ failure to meet their financial obligations will be one of the causes of economic problems if the increase in consumption is largely financed by household borrowing. Therefore, this study aims to analyse the nexus between households’ indebtedness and consumption and the roles of household characteristics.

This study uses a microdata set of the Household Expenditure and Income Survey in 2019, which contained a simple random sampling of 4,730 households.

Using a simultaneous equations model, our results show a negative nexus between households’ consumption and their indebtedness. We find that household savings and size have an indirect impact on the debt service ratio, while the assets and total debt repayment instalments indirectly influence household consumption. We also identify differences in the relationship between the gender of the household head, rural and urban locations and income groups in consumption and indebtedness.

The implication of this study is that governments should adopt several programmes to increase the awareness of household financial and debt management, especially for those in the low-income group.

This study contributes to the empirical literature by establishing a microeconomic perspective of consumption and an indebtedness model focusing on the differences in household characteristics in explaining consumption and indebtedness.

The purpose of this paper is to contribute to the teaching of undergraduate macroeconomics.

To suggest a roadmap, based on a consumption function, to be used by instructors willing to teach the Lucas Critique subject.

Therefore, this paper proposes a lesson, which consists of three parts, to help undergraduates better understand the subject: (1) a grading exercise to bring the topic closer to students’ lives; (2) a Keynesian and an optimal consumption function, followed by an example based on an unemployment insurance policy; and (3) two optional topics consisting of extensions of the optimal consumption function and some empirical results related to the Lucas Critique.

The Lucas Critique influenced the evolution of research in macroeconomics, but it is not easily grasped in a classroom.

The purpose of this paper is to determine whether current account imbalances – surpluses or deficits – are “excessive” and hence constitute a valid concern. The second objective is to assess the degree of capital mobility by comparing the variance of the current account derived from the intertemporal model with that of the actual current account.

The paper addresses the issues by constructing the intertemporal model using annual data between 1960 and 2006. The authors applied the F‐test, the Bartlett test and the Siegel‐Tukey test to formally validate for equality of the variances of the optimal and actual consumption smoothing current accounts.

Based on vector autoregressive model, it was found that the present value of future net output closely reflects the evolution of the current account series with a small (insignificant) deviation between the actual and the estimated consumption‐smoothing current account. The results show that the hypothesis of full‐consumption smoothing could not be rejected by the data for the full sample period, implying that the degree of capital mobility was quite high, even during the post‐1997 period. The variance ratio of the actual current account to the optimal current account is not statistically greater than one. Therefore, it is concluded that there is no evidence to suggest inappropriate use of capital flows over the entire sample period under investigation.

The authors relied on a more general framework, as suggested by Bergin and Sheffrin, which allows real interest rate to affect current account in order to provide a new perspective on Thailand's current account balance.