Estimation of Iran's Consumption Function Using Quantile Regression Method

Mohammadreza Monjazeb, Hosein Amiri, Farshid Vojdani and Akram Movahedi
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Mohammadreza Monjazeb: Associate Professor, Department of Economics, Public Affairs, Kharazmi University, Tehran, Iran
Hosein Amiri: Associate Professor of Economics and Islamic Banking, Kharazmi University, Department of Economics, Faculty of Economics, Tehran, Iran
Farshid Vojdani: M.A in Economics, Kharazmi University, Department of Economics, Faculty of Economics, Tehran, Iran
Akram Movahedi: M.A in Economics, Kharazmi University, Department of Economics, Faculty of Economics, Tehran, Iran

Quarterly Journal of Applied Theories of Economics, 2025, vol. 12, issue 1, 25-48

Abstract: In macroeconomics, aggregate consumption assumes a pivotal role as a fundamental component of total demand. It directly influences production and employment while indirectly contributing to overall economic growth through savings and investment. Insights gleaned from consumption function estimations and the study of the marginal propensity to consume (MPC) inform economic policy decisions. Economists have diligently explored the intricate relationship between consumption behavior and influential factors. The primary objective of the research you mentioned is to examine the nexus between consumption, income, and wealth during the period spanning from the first quarter of 1369 to the third quarter of 1401, utilizing quantile regression techniques. By analyzing a diverse set of comprehensive models grounded in macroeconomic principles, the study aims to identify an optimal model for Iran's economy. The empirical results reveal that income and wealth have a positive and statistically significant impact on consumption, with consistent effects observed across different quantiles. Furthermore, the Brownian habit persistence model aligns well with Iran's economic dynamics, implying that government interventions related to pricing and taxation can effectively shape community consumption patterns and contribute to overall economic growth

Keywords: Consumption Function; Income, Wealth; Quantile Regression (search for similar items in EconPapers)
JEL-codes: C32 D14 E21 (search for similar items in EconPapers)
Date: 2025
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