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The Relationship between Income, Consumption and GDP of Asian Countries: A Panel Analysis

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  • Sima Rani Dey

    (Bangladesh Institute of Governance and Management, Bangladesh)

Abstract

This paper attempts to scrutinize the co-integration relationship between consumption, income and GDP per capita in panel data series. We have applied unit root test, co-integration test and FMOLS estimation technique to analyze the data. Data covers 11 Asian countries of three income categories – lower middle income, upper middle income and high income. The study contemplated the annual observations of 35 years from 1980 to 2014. Study revealed that the association between consumption and income is stronger in lower and upper middle income countries. The low level of income determines its maximum use predominantly for consumption. The relation between consumption, income and GDP per capita is stronger for lower middle income countries, thereby the countries with higher income generally tend to make big investments.

Suggested Citation

  • Sima Rani Dey, 2019. "The Relationship between Income, Consumption and GDP of Asian Countries: A Panel Analysis," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 17(2 (Summer), pages 113-127.
    • Handle: RePEc:mgt:youmgt:v:17:y:2019:i:2:p:113-127
    DOI: 10.26493/1854-6935.17.113-127
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    References listed on IDEAS

    as
    1. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
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    3. Scott Ross Baker & Contantine Yannelis, 2017. "Income Changes and Consumption: Evidence from the 2013 Federal Government Shutdown," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 99-124, January.
    4. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    5. Pedroni, Peter, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    6. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    income; consumption; GDP; panel unit roots; panel cointegration;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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