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The asymmetric effect of income and price changes on the consumption expenditures : evidence from G7 countries using nonlinear bounds testing approach
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Orientador(es)
Resumo(s)
Previous studies mainly focused on linear models to examine the relationship between
price changes, income changes, and consumption expenditures. However, the recent
literature supports the nonlinear relationship between economic and fnancial varia bles. This study contributes to the existing literature using a novel approach called the
nonlinear ARDL model. This model helps to examine the efect of positive and nega tive shocks in income and price changes on consumption expenditures. Based on the
nonlinear ARDL model, the fndings indicate that an increase in income signifcantly
and positively afects household consumption expenditures in the short and long run.
In contrast, a decrease in income does not signifcantly afect consumption. Likewise,
price changes are unimportant in explaining the changes in consumption expendi tures in the selected countries. Therefore, our fndings support the use of this novel
technique to examine the nonlinear nature of the relationship among the given vari ables. These fndings provide important policy implications concerning the positive
and negative shocks of the exogenous variables on the dependent variables implying
that devising the same policies during increasing and decreasing income and prices
may lead to unfavorable consequences that hamper economic growth.
Descrição
Palavras-chave
G7 countries Consumption NARDL model Distributional asymmetry
Contexto Educativo
Citação
Wang, Xi ... [et al.] (2024). "The asymmetric effect of income and price changes on the consumption expenditures : evidence from G7 countries using nonlinear bounds testing approach". Portuguese Economic Journal, 23(1):35-53
Editora
Springer