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Is the consumption-income ratio stationary in African countries? Evidence from new time series tests that allow for structural breaks

Author

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  • Sakiru Adebola Solarin
  • Muhammad Shahbaz
  • Chris Stewart

Abstract

This article examines whether the consumption-income ratio is stationary in 50 African countries. We use the residual augmented least squares (RALS-LM) unit root test that allows for structural breaks. The empirical evidence shows that the consumption income ratio is stationary around structural breaks in most (44 out of 50) African countries. This is consistent with the predictions of most economic theories. The general finding of mean reversion implies that (policy) shocks are likely to have only temporary effects on the consumption-income ratio in most African countries .

Suggested Citation

  • Sakiru Adebola Solarin & Muhammad Shahbaz & Chris Stewart, 2018. "Is the consumption-income ratio stationary in African countries? Evidence from new time series tests that allow for structural breaks," Applied Economics, Taylor & Francis Journals, vol. 50(38), pages 4122-4136, August.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:38:p:4122-4136
    DOI: 10.1080/00036846.2018.1441515
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    Cited by:

    1. Mirza, Nawazish & Rahat, Birjees & Naqvi, Bushra & Rizvi, Syed Kumail Abbas, 2023. "Impact of Covid-19 on corporate solvency and possible policy responses in the EU," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 181-190.
    2. Saadet Kasman & Adnan Kasman, 2021. "Convergence in obesity and overweight rates across OECD countries: evidence from the stochastic and club convergence tests," Empirical Economics, Springer, vol. 61(2), pages 1063-1096, August.

    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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