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Forecasting of Households Consumption Expenditure with Nonparametric Regression: The Case of Turkey

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  • Noyan Aydin Taner Akmercan

    (Faculty of Economics and Administrative Sciences, Department of Econometrics Kutahya, Turkey)

Abstract

The relationship between household income and expenditure is important for understanding how the shape of the economic dynamics of the households. In this study, the relationship between household consumption expenditure and household disposable income were analyzed by Locally Weighted Scatterplot Smoothing Regression which is a nonparametric method using R programming. This study aimed to determine relationship between variables directly, unlike making any assumptions are commonly used as in the conventional parametric regression. According to the ?ndings, effect on expenditure with increasing of income and household size together increased rapidly at ?rst, and then speed of increase decreased. This increase can be explained by having greater compulsory consumption expenditure relatively in small households. Besides, expenditure is relatively higher in middle and high income levels according to low income level. However, the change in expenditure is limited in middle and is the most limited in high income levels when household size changes. JEL Classification: C14; D12

Suggested Citation

  • Noyan Aydin Taner Akmercan, 2016. "Forecasting of Households Consumption Expenditure with Nonparametric Regression: The Case of Turkey," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 19(2), pages 19-32, November.
    • Handle: RePEc:zag:zirebs:v:19:y:2016:i:2:p:19-32
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    References listed on IDEAS

    as
    1. Delgado, Miguel A & Miles, Daniel, 1997. "Household Characteristics and Consumption Behaviour: A Nonparametric Approach," Empirical Economics, Springer, vol. 22(3), pages 409-429.
    2. Härdle,Wolfgang, 1992. "Applied Nonparametric Regression," Cambridge Books, Cambridge University Press, number 9780521429504.
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    Keywords

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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