scholarly journals The Permanent Income Hypothesis: Evidence from Ghana

2020 ◽  
pp. 1-7
Author(s):  
Sherif Abdul Rahaman
Keyword(s):  
Arma Model ◽  
Household Consumption ◽  
Permanent Income ◽  
Gdp Per Capita ◽  
Annual Data ◽  
Consumption Expenditure ◽  
Permanent Income Hypothesis ◽  
Per Capita

This study aims to test the validity of the PIH for Ghana using aggregate annual data of GDP per capita and household consumption expenditure per capita from 1971 to 2017. The data used were taken from UN statistics. The PIH holds that the income a consumer expects to persist throughout his or her life is what determines their consumption. Earlier studies have shown that the PIH implies the magnitude of the revision in permanent income arising from innovation in the income process is proportional to the magnitude of the revision in consumption arising from the same innovation. This study tests this implication. Innovation in the income process here is the part of the income process that could not be forecasted. The study generates the innovation in the income process by estimating an ARMA model for income and then estimates a consumption equation by OLS using the consumption variable and the generated innovation in income variable.The study finds that the magnitude of the revision in permanent income arising from the innovation in income is larger than the magnitude of the revision in consumption resulting from the same innovation. This implies consumption response to changes in income is smaller than what the PIH predicts. This result is taken as evidence that the PIH does not hold for Ghana.

scholarly journals The Impact of Covid-19 on The Effect Multiplier on The Household Consumption Function in Jakarta

2021 ◽  
Vol 3 (2) ◽  
Author(s):  
Fahrul Riza ◽  
Michael Christianto Leonardo
Keyword(s):  
National Income ◽  
Household Consumption ◽  
Permanent Income ◽  
Annual Data ◽  
Consumption Expenditure ◽  
Permanent Income Hypothesis ◽  
Consumption Function ◽  
Short Term ◽  
Consumption Expenditures ◽  
The Impact

The purpose of this study is to examine the effect of a decrease in aggregate income, due to activity restrictions during the Covid-19 pandemic, on household consumption expenditure in Jakarta. The research model is based on the Absolute and Permanent income hypothesis, to see the long-term and short-term effects of changes in income on consumption expenditure. The research method is quantitative by using annual data on consumption expenditure and income at current prices for the period 2003 to 2020. The analysis model uses OLS and ECM regression. The results showed that income has a significant effect on the equation of the short-run and long-run consumption function. The short-term income crisis has an impact on the increase in the multiplier coefficient. In the short term there will also be an adjustment in consumption expenditures, according to what is postulated in the permanent income hypothesis. This indicates that in the short term expansionary fiscal policy is effective in increasing aggregate household consumption expenditure. Further research suggests adding the inflation variable as a proxy for economic conditions. Keywords: Absolute Income Hypothesis, Permanent Income Hypothesis, Household Consumption Expenditures, National Income, Multiplier.

Level and Pattern of Consumption Expenditure of Rural Households among Different Regions of Punjab

2021 ◽  
pp. 468-473
Keyword(s):  
Rural Households ◽  
Household Consumption ◽  
Farm Households ◽  
Capita Consumption ◽  
Primary Data ◽  
Consumption Expenditure ◽  
Large Farm ◽  
Per Capita ◽  
Per Capita Consumption

The present study, dealing with the inequality in consumption of the rural households across the different regions, is based upon the primary data of the Punjab state. The analysis showed that Malwa excelled other two regions in the per capita consumption. The highest average propensity to consume was observed for Doaba, and it was the lowest for Malwa. All the rural households except large farm of all the three regions and medium farm households of Malwa and Majha were in deficit. Considering all households together, the inequality of household consumption expenditure was relatively high in all three regions, with the same being highest in Majha, followed by Malwa and Doaba. The concentration of consumption expenditure among the land-owning households was greater than the landless households.

Nonfarm diversification and the well-being of rural farm households in developing countries: Evidence from Ghana using new dataset

2018 ◽  
Vol 69 (3) ◽  
pp. 207-229
Author(s):  
Bernardin Senadza ◽  
Edward Nketiah-Amponsah ◽  
Samuel Ampaw
Keyword(s):  
Well Being ◽  
Household Consumption ◽  
Empirical Method ◽  
Farm Households ◽  
Consumption Expenditure ◽  
Switching Regression ◽  
Rural Ghana ◽  
Per Capita ◽  
Nationally Representative ◽  
The Impact

Abstract This paper examines the impact of participation in both farm and nonfarm activities on both household consumption expenditure per adult equivalent and household per capita income, in rural Ghana. The objective is to ascertain whether the results are sensitive to the choice of well-being measure. We use a nationally representative dataset on 8,059 rural farm households collected in 2012/13. In order to account for potential selectivity and endogeneity biases, which previous studies failed to correct for, we adopt the endogenous switching regression (ESR) estimation technique. We find diversified households to be systematically different from their undiversified counterparts in terms of socioeconomic and demographic centeracteristics, thus justifying the empirical method used. Our results indicate a higher observed mean consumption for the diversified sub-sample compared to its counterfactual, implying that households participating in nonfarm enterprise activities in addition to farming have greater mean consumption compared to households engaged solely in farming. Similar conclusions are reached when income instead is used as the well-being indicator. Our findings, thus, indicate that the well-being implication of farm-nonfarm diversification is insensitive to the choice of well-being measure.

scholarly journals Testing the Existence of the Ricardian Equivalence in Ghana in this 21st Century

1970 ◽  
Vol 2 (2) ◽  
pp. 16-27
Author(s):  
Okwan Frank ◽  
Kovacs Peter
Keyword(s):  
Time Series Data ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
Gdp Per Capita ◽  
Series Data ◽  
Ricardian Equivalence ◽  
Consumption Expenditure ◽  
Model Framework ◽  
Long Run ◽  
Per Capita

The Ricardian Equivalence Hypothesis formulated by a classical British economist David Ricardo argues that a reduced tax now is a tax increase in the future, the substitution of debt for current taxes has no effect on aggregate demand. The main objective of this paper is to examine empirically the existence of the Ricardian equivalency in Ghana by using time series data running from 1990 to 2017 and ARDL bound testing approach to cointegration and Error Correction Model framework developed by Pesaran and Shin (1995,1999). We examined the long run relationship between the dependent variable household final consumption expenditure and independent variables government expenditure, deficit, GDP per capita and gross debt. The long run results showed a positive and significant relationship between GDP per capita and household consumption expenditure. The result of analysis supports the Keynesian conventional theory and found strong evidence against the existence of the Ricardian Equivalency Hypothesis in Ghana.

Determinants of Foreign Direct Investment in India’s Service Sector

2014 ◽  
Vol 1 (1) ◽  
Author(s):  
Niti Bhasin
Keyword(s):  
Trade Openness ◽  
Ordinary Least Squares ◽  
Gdp Per Capita ◽  
Annual Data ◽  
Fdi Inflows ◽  
Skilled Labour ◽  
Services Sector ◽  
Lagged Dependent Variable ◽  
Per Capita ◽  
The Impact

With the ever-growing importance of services sector in India’s economy, this paper seeks to identify the determinants of FDI in the services sector. The study uses ordinary least squares regression analysis and examines the impact of GDP, GDP per capita, trade openness, FDI openness, and labour cost on FDI inflows. We also use another specification to include the lagged dependent variable as an explanatory variable. Using annual data for the period 1991 to 2010, we find that FDI inflows in the services sector in India are significantly determined by national income, GDP per capita, trade openness, FDI openness and skilled labour availability. This confirms the view that FDI in the services sector is efficiency-seeking and greater availability of skilled labour in India leads to greater inflows of FDI in services sector.

Labor Market Transition and the Impact of Education on Real Per Capita Household Consumption Expenditure in Vietnam

2011 ◽  
Vol 32 (1) ◽  
pp. 96-108
Author(s):  
Hoang Van Kinh ◽  
Daniel Westbrook
Keyword(s):  
Labor Market ◽  
Educational Attainment ◽  
Transition Period ◽  
Household Consumption ◽  
Substantial Part ◽  
Consumption Expenditure ◽  
Market Activity ◽  
Per Capita ◽  
The Impact ◽  
Labor Market Activity

The degree to which the impact of schooling on real per capita household consumption expenditure (rpce) depends on the intensity of local labor market activity was estimated and changes in that relationship during a substantial part of Vietnam’s transition period (1993–2004 were documented). Key variables in the analysis are the years of schooling attained by the best-educated member of each household, an index of labor market activity at the commune level, and the interaction between the two. As schooling is likely to be endogenous, average educational attainment of others in the same age, gender, and commune cohort was used as an instrumental variable (IV). The estimated impact of educational attainment on rpce is economically substantial, statistically significant, increasing over time, and is powerfully enhanced by increasing labor market activity.

Income and Consumption Expenditure Pattern of Marginal and Small Farmers in Punjab

2020 ◽  
pp. 619-624
Keyword(s):  
Family Income ◽  
Household Consumption ◽  
Consumption Pattern ◽  
Annual Income ◽  
Small Farmers ◽  
Consumption Expenditure ◽  
Total Income ◽  
Climatic Zones ◽  
Per Capita ◽  
Expenditure Pattern

The study highlighted the income and consumption pattern of the marginal and small farmers in the three agro-climatic zones of Punjab for 2011-12. It was found that out of the total net family income of these farmers, the majority was earned from crop and dairying, followed by income from non-farm activities. The net per capita annual income of marginal and small farmers was found to be as low as about 15361 and 26625. Corresponding to this, the annual per capita household consumption expenditure was 12144 and 13239. This situation depicted the vulnerability of these farmers to indebtedness in case of unforeseen expenditure situations. Also, there existed an income and consumption disparity in Punjab, whereby the poorer section accounts for less than one-fifth share of the total income and expenditure. There was a need to address the problems of this section in isolation as this section formed the major proportion of the farming population in the state and was most prone to economic misery.

scholarly journals ANALISIS DETERMINAN TINGKAT PENGELUARAN KONSUMSI PANGAN DI JAWA TIMUR

2020 ◽  
Vol 13 (1) ◽  
pp. 92
Author(s):  
Ahmad Zainuddin ◽  
Ratih Apri Utami ◽  
Nurul Dwi Novikarumsari
Keyword(s):  
Linear Regression Analysis ◽  
Secondary Data ◽  
Multiple Linear Regression Analysis ◽  
Household Consumption ◽  
Consumption Expenditure ◽  
Factors Affecting ◽  
Goods And Services ◽  
Food Expenditure ◽  
Per Capita ◽  
The Government

East Java is a province that has a high population, household consumption expenditure is an important thing to consider. The implication is that there will be an increase in production and investment in East Java. Therefore, household consumption expenditure is one of the determinants of community welfare. This study aims to analyze the structure of household consumption expenditure and the factors that influence food expenditure in East Java. The data used were secondary data from East Java in Figures 2019. This study was analyzed using multiple linear regression analysis. The analysis showed that there has been an increase in the welfare of the people of East Java. This is indicated by an increase in the amount of non-food expenditure is higher than food expenditure. Factors affecting household food expenditure in East Java are GRDP per capita, inflation rate, rice prices, and non-food expenditure. Based on these results it is suggested that the government needs to maintain the stability of prices of goods and services to avoid inflation because inflation will reduce public consumption and have implications for the economy of East Java. Keywords: food expenditure, GDRP per capita, inflation

scholarly journals Fertility and Household Welfare in Nigeria: A Time Series Econometric Approach

2022 ◽  
Vol 10 (1) ◽  
pp. 1-10
Author(s):  
Ovikuomagbe Oyedele
Keyword(s):  
Unit Root Test ◽  
Household Consumption ◽  
Gdp Per Capita ◽  
Household Welfare ◽  
Demographic Dividend ◽  
Real Gdp ◽  
Long Run ◽  
Real Gdp Per Capita ◽  
Short Run ◽  
Per Capita

This study examines the effect of fertility levels on household welfare in Nigeria during the period from 1980 to 2020. Using data from the World Development Indicators for 2021, the estimation process began with a unit root test for the stationarity of the variables. A bounds cointegration test showed the presence of a long-run relationship between household consumption expenditure and fertility, but the result was inconclusive when real GDP per capita was used as a welfare proxy. The ARDL model was employed and the results showed that fertility had a negative, significant effect on household consumption per capita only in the short run. The effect was from previous years thereby showing a lagged effect. However, when welfare is measured using real GDP per capita, there were both short-run and long-run effects, such that Kuznets’ hypothesis of an inverted U-shaped relationship was obtained in the short run. In the long run, however, the relationship becomes U-shaped, implying that there is the possibility of a demographic dividend in the long run. Fertility policies must endeavor to control for the immediate or short-run negative effects of rising fertility rates and make deliberate plans to engage the future large working population in order to reap the possible demographic dividend.

scholarly journals Has the NAFTA Foundation Affected Business Cycles Length? An Introduction

2013 ◽  
Vol 60 (1) ◽  
pp. 145-153
Author(s):  
Dimitrios Dapontas ◽  
Panagiotis Evangelopoulos
Keyword(s):  
Business Cycles ◽  
Spectral Density ◽  
Background Noise ◽  
Cycle Length ◽  
Gdp Per Capita ◽  
Annual Data ◽  
Multinational Organization ◽  
Per Capita ◽  
The Relationship

Abstract This paper is explaining the relationship between NAFTA foundation and business cycles length. Has the participation in a multinational organization changed their frequency? Initially; we used GDP per capita growth annual data for each country countries (Canada, Mexico and USA) for 63 years (1950-2012). The data was cut for each country in two pieces one before the 1995 and one on the year of integration and after. Then we selected their spectral density plots in order to find periodicity eliminating the background noise from a periodogram. The results show that Canada doubled its cycle length progressively. Mexico and USA seem to have currently smaller but growing cycles than they used to have.

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