This article compares several methodologies for analysing unidirectional and bi-directional causality between Consumption and GDP in the USA, Mexico and other countries during the period 1960-2000. Bilateral causality is analysed comparing Granger´s test, a modified version of Granger´s test here suggested, TSLS, Hausman´s causality test and other approaches. The main conclusion is that the modified version of Granger´s test performs rather well and that Hausman´s test is very often useful for reinforcing the conclusions of multiple equations models with contemporaneous interdependence. Regarding the bilateral relationship between Consumption and GDP we conclude that there is a moderate degree of contemporaneous relation, with a high degree of dependence of Private Consumption on GDP and a lower dependence in the case of the reverse relation, because GDP is more dependent on supply side conditions than on demand side. This result is relevant for economic policies in less developed countries where very often emphasis is made more in the reverse relations than in the main ones.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
For technical questions regarding this item, or to correct its listing, contact: (M. Carmen Guisan).
Related research
Keywords:
Other versions of this item:
Find related papers by JEL classification: C5 - Mathematical and Quantitative Methods - - Econometric Modeling C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)