Consumption Contribution to Economy Growth

The analysis of the final consumption influence on the Gross Domestic Product is rarely studied. The final consumption is one important studies that follow the expenses method of GDP calculation and formation. The econometric approach gives substantial results when a longer interval is approached. The fact of econometric model is the dependence of the national economy on final consumption. Thus, the unifactorial regression model can be used to establish the influence that the value of final consumption. The Researcher make some description about final consumption in Southeast Asia+3 and US.

Money and Household Consumption Expenditure in Developing Asia: Some Panel ARDL Evidence

The role of money in influencing real economic activities has been a long-standing debate in macroeconomics. As per the Keynesian theory, household consumption expenditure plays a significant role in promoting economic growth. Given the rapid consumption-led growth pattern in the emerging Asia Pacific region, in this article, we attempt to assess the role of money in influencing household consumption expenditure, which propels economic growth. We employ a panel data set from 2005–2018 for 10 emerging Asian economies, covering Bangladesh, Cambodia, India, Indonesia, Malaysia, Pakistan, Philippines, Sri Lanka, Thailand and Vietnam. Given the region’s heterogeneous nature, we employ a variant of the popular St Louise equation model with autoregressive distributed lag model (ARDL) panel framework based on pooled mean group (PMG) and dynamic fixed effect (DFE) models developed by Pesaran and Shin to study the underlying relationships. Both PMG and DFE models suggest a strong positive relationship between money and household consumption expenditure both in the long run and short run. After allowing for control variables such as government final consumption expenditure and interest rate, the relationships continue to hold steady. Further, the relationship holds true across both narrow (M1) and broad money (M3) measures. The government final consumption expenditure and interest rates do not have influence on household consumption expenditure in the long run, but they have an influence in the short run. JEL Codes: C23, O16, O47, E51, E31, E21

The Paradox of Thrift: A Case Study of United States of America

Vermann (2012) and Thies (1996)’s papers indicate that the paradox of thrift is no longer in vogue in United States of America (USA). This paper argues that the paradox of thrift is still applicable to USA even though she is operating with sufficient demand. The main objective of this paper is to determine whether the paradox of thrift is applicable to USA after the Great Depression. In doing this, a vector error correction model was estimated using annual data of gross national income, gross domestic saving, gross domestic investment and final consumption expenditure from 1971 to 2020. The results of the investigation showed that final consumption expenditure and gross domestic saving increase when gross national income increases. Gross national income falls and current saving is unchanged when previous saving rises. The paradox of thrift is applicable to USA after the Great Depression. The target of economic policy should be gross national income and not gross domestic saving because naturally both final consumption expenditure and gross domestic saving will increase if gross national income increases in USA.

The Paradox of Thrift: Empirical Evidence in Nigeria

Vermann (2012) and Thies (1996)’s papers indicate that the paradox of thrift is no longer in vogue. This paper argues that the paradox of thrift is applicable to the developing country like Nigeria which is operating with deficient demand. The main objective of this paper is to determine whether the paradox of thrift is applicable to Nigeria. In doing this, a vector error correction model was estimated using annual data of gross national income, gross domestic saving, gross domestic investment and final consumption expenditure from 1986 to 2019. The results of the investigation showed final consumption expenditure and gross domestic saving increase when national income increases. Gross national income falls and current saving is unchanged when previous saving rises. The paradox of thrift is applicable to Nigeria. The target of economic policy should be gross national income and not gross domestic saving because naturally both final consumption expenditure and gross domestic saving will increase if gross national income increases in Nigeria.

ECONOMIC RESPONSE OF THE EUROPEAN COUNTRIES TO THE FIRST WAVE OF COVID-19

COVID-19 pandemic has caused the deepest crisis since the World War II. Many countries have slid into recession due to continuous GDP fall. Lockdown has an impact on unemployment growth, while the provision of health systems and state aid to vulnerable sectors and population are deepening fiscal deficits. Based on the example of 31 European countries (27 EU members and several countries with which the Union has different agreements), this research determines impact of key economic and social variables in period of the First wave of COVID-19 pandemic on the “Economic stimulus”, which is represented by composite index CESI. It is about a combination of variables: Democracy Index, Stringency Index, Final Consumption, Gross Investment, Health Expenditure, and Hospital Beds per Thousand People. Using the median method, the total sample has been divided into two groups, the one with less and the one with more infected people. The results of cross section regression analysis show that 52% variations in the Economic stimulus in the total sample is determined by predictor variables in the model. Analysis for the countries with less infected people shows that more than 75% variations in the Economic stimulus is determined by joint trends of the predictor variables, while the Analysis with more infected cases shows coefficient of determination (R2) over 71%. In general, the results of econometric analysis unambiguously show that democracy contributes to the economic policy response to pandemic in all three observed cases. Stringency index contributes to democracy in an inversely proportional sense, especially in the case of countries with larger number of infected persons. The same could be said for the variable Final Consumption in the case of the total sample of countries, where markedly reduced final consumption requires stronger economic reaction and the governmental aid of all the countries included in the sample.

Consumption-Based CO2 Emissions Accounting And Scenario Simulation In Asia And Pacific Region

This study uses a consumer-based accounting approach to evaluate CO2 emission factors of 17 major Asia and Pacific countries that distribute all emissions in the supply chain to the commodity up to the final consumption location due to the influence of a country's consumption patterns. In addition, the number of emissions connected with each country's consumption of products and services, mainly in Asia and the Pacific countries, has received little attention. This study contributes to understand the effects of the country's consumption of products and services on carbon emission peaks and formulate efficient carbon-mitigation plans for governments and decision-makers. The accelerating economic growth and industrialization have posed significant challenges to global carbon-mitigation efforts and climate change response; as a result, each country has been provided a higher emphasis on CO2 emission. The Monte Carlo simulation technique has been used to create a dynamic scenario simulation model to investigate possible future peaks of Asia and Pacific countries' carbon emissions, considering the uncertainties of factors. The result shows that total consumption-based CO2 emissions are remarkable in the three Asian countries, including China (387451.95 metric tons (Mt) CO2), Japan (185259.60 Mt CO2), and India (100720.46 Mt CO2). In South Korea, Brunei, and Taiwan, annual consumption emissions are 1.77, 1.62, and 1.49 tons of CO2 per person. In terms of final consumption, the household sector is the supreme noteworthy donor to consumption-based emissions, accounting for 27–56%. The household sector probably peak at 19.7 Gt CO2 as per the dynamic scenario simulation. As for three other types of final demand, the government expenditure will possibly reach at highest 44.0 Gt CO2 by the next 30 years while the capital formation will probably hit its highest emissions at 149.5 Gt CO2.

The Complementary Effect between Private Consumption and Government Spending: Effect on the Economy

This paper analyzes the relationship between final consumption and government spending, using the correlation and linear regression model. The objective of the research is whether government expenditures are complementary, substitute, or not related to private consumption to give positive effects on the economy. Methodology, quantitative secondary data were obtained from the World Bank, for five countries and processed with SPSS, 21. The empirical analysis was verified through, Bivariate and Partial correlation and normality test. The Result, first, shows that government spending complements and replaces final consumption. Second, it is also confirmed that even when interacting with other variables, the complementary effect of final consumption is not eliminated despite the shocks coming from government spending. Third, by adding other variables to the model, the issue of complementarity and substitutability of the two main variables is not lost. As a result, findings, confirm that private consumption (InCt) and government spending (InGt), Gross Savings (GS), and per capita income (GDPpc), are in statistically significant and positive relationships with each other. The novelty of the paper is, government expenditures cause an increase in private consumption is to high value, showing the complementary effect of government expenditures on private consumption. Based on health expenditures, education, public order, internet provided by the state have increased the demand of families for these services, causing an increase in the share of services provided by the private sector.JEL Classification: E21; H5; E2; R0. Doi: 10.28991/esj-2021-01292 Full Text: PDF

COINTEGRATED-BASED FORECAST OF LONG-RUN RELATIONSHIPS

The Vector Error Correction Model (VECM) and the Autoregressive Distributed Lag Model (ARDL) are used to estimate the cointegration in the case of long-run relationship of quarterly GDP and Final Consumption in Romania during the period 1995 – 2019. The actual data of 2020 Q1 and Q2 were used to check the best model’s validity. The static and dynamic approaches of the ARDL model were used to forecast the Final Consumption for Q3 and Q4 of the year 2020. Applying the cointegration model shows the long term relationship of GDP and Final Consumption, but also the effects of other factors, seen in the differences of Final Consumption from its Long-Run evolution, and comprised in the cointegrating terms.

Capability accumulation and product innovation: an agent-based perspective

This paper studiesthe relevance of productheterogeneity and relatedness for the accumulation ofcapabilities in firms, as well as their implications for innovation dynamics. The existing literature has produced extensive evidence on the relevance of capability accumulation for innovation processes. Yet, an assessment of prior attempts to model these processes indicates that when it comes to the final consumption good sector, the evolutionary macroeconomic literature has focused on process rather than product innovation. To facilitate the consideration of empirical and microeconomic insights on product innovation in these models, this paper introduces a simple agent-based model, which may later serve as an innovation module in macroeconomic models. In the model, firms accumulate capabilities to produce final consumption goods that are heterogeneous in terms of their complexity and differ in their relatedness to each other. The model is used to study theoretical implications of different topological structures underlying product relatedness by conducting simulations with different ‘product spaces’. The analysis suggests that the topological structure of the product space, the assumed relationship between product complexity and centrality, as well as the relevance of product complexity in price setting dynamics have significant but nontrivial implications and deserve further attention in evolutionary macroeconomics.