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

Sakiru Solarin, Muhammad Shahbaz and Chris Stewart

No 2018-2, Economics Discussion Papers from School of Economics, Kingston University London

Abstract: This paper 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 developed by Meng et al. (2014). 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 theory. 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.

Keywords: consumption-income ratio; African countries; unit root tests; structural breaks (search for similar items in EconPapers)
JEL-codes: C22 E12 E21 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2018-04-24
New Economics Papers: this item is included in nep-afr and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:kngedp:2018_002

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