Determinants of Consumption Function, In Case of China and G7 Countries

Khalid Khan, Chen Fei, Muhammad Kamal and Sarfaraz Ahmed Shaikh
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Khalid Khan: School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China
Chen Fei: School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China
Sarfaraz Ahmed Shaikh: School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China

International Journal of Economics and Empirical Research (IJEER), 2015, vol. 3, issue 4, 202-210

Abstract: Purpose: The objective of the study is to estimate consumption function for China and G7countries. Methodology: The study applied ARDL approach to estimate consumption function over the period 1985 to 2013. Findings: The results of the study indicate that Gross Domestic Product (GDP) and wealth are the most important determinants of aggregate consumption in both short and long run. However, real interest rate, negatively affect the aggregate private consumption both in the long and short run, apart from Canada, similarly, unemployment rate have negative effect of aggregate consumption in all cases. Recommendations: This study open new directions for further research.

Keywords: Private Consumption; Gross Domestic Product (GDP); Wealth; Real Interest Rate (search for similar items in EconPapers)
JEL-codes: E2 F43 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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