The Stationarity of Consumption-Income Ratios: Nonlinear Evidence in ASEAN Countries

Sakiru Solarin

Journal for Economic Forecasting, 2017, issue 2, 109-123

Abstract: The objective of this paper is to investigate the nonstationarity of consumption–income ratios in the ASEAN countries. After establishing that the series follows a nonlinear process, we employ different types of nonstationarity tests including the Wu and Lee (2009) approach in the estimation process. The results show that consumption–income ratio is non-stationary in most of the countries, as suggested by the absolute income hypothesis and the involuntary saving theory. The findings are important because they suggest that government interventions through the fiscal and monetary policies are likely to have enduring impact on the consumption–income ratio in the region.

Keywords: consumption–income ratio; unit root tests; nonlinearity; cross-sectional dependence; ASEAN countries (search for similar items in EconPapers)
JEL-codes: C12 C32 C33 D12 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2017:i:2:p:109-123

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