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An Investigation of the Long-run Properties of Aggregate Non-durable Consumers' Expenditure in the United Kingdom

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  • Drobny, A
  • Hall, S G

Abstract

This paper estimates the effects of the modeling of nondurable consumption in the light of the five years of new data since the publication of the paper by J. E. H. Davidson et al. (1978) and the development of the new cointegration technique of R. F. Engle and C. W. J. Granger (1987). Existing models are found to be inadequate on two grounds, they fail parameter stability tests and they do not contain a suitable equilibrium specification. The paper uses the cointegration approach to search for an encompassing model that is both stable and cointegrates. The main finding is that the analysis must be extended to allow for differential income effects caused by changing higher rate income tax bands. Copyright 1989 by Royal Economic Society.

Suggested Citation

  • Drobny, A & Hall, S G, 1989. "An Investigation of the Long-run Properties of Aggregate Non-durable Consumers' Expenditure in the United Kingdom," Economic Journal, Royal Economic Society, vol. 99(396), pages 454-460, June.
  • Handle: RePEc:ecj:econjl:v:99:y:1989:i:396:p:454-60
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    Cited by:

    1. Li-gang Liu & Laurent Pauwels & Andrew Tsang, 2007. "Hong Kong's Consumption Function Revisited," Working Papers 0716, Hong Kong Monetary Authority.
    2. Gomes, Fábio A. R. & Franchini, Douglas de S., 2008. "The Stationarity of Consumption–Income Ratios: Evidence from South American Countries," Insper Working Papers wpe_123, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    3. Li-gang Liu & Laurent Pauwels & Andrew Tsang, 2007. "How Large is the Wealth Effect on Hong Kong¡¦s Consumption? Evidence from a Habit Formation Model of Consumption," Working Papers 0720, Hong Kong Monetary Authority.
    4. Steven Cook, 2003. "The nonstationarity of the consumption-income ratio: Evidence from more powerful Dickey-Fuller tests," Applied Economics Letters, Taylor & Francis Journals, vol. 10(7), pages 393-395.
    5. Dimitris Christopoulos & Eftymios Tsionas, 2002. "Non-Sationarity in the Consumption-Income Ratio: Further Evidence from Panel and Assymetric Unit Root Tests," Economics Bulletin, AccessEcon, vol. 3(12), pages 1-5.
    6. Kirsten Ludi, 2006. "Consumption Behaviour in Zambia: The Link to Poverty Alleviation?," Working Papers 200602, University of Pretoria, Department of Economics.
    7. repec:rjr:romjef:v::y:2017:i:2:p:109-123 is not listed on IDEAS

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