Estimation of Private Consumption Function of Iran: Autoregressive Distributed Lag Approach to Co-integration

Estimation of Private Consumption Function of Iran: Autoregressive Distributed Lag Approach to Co-integration

Blog Article

Considering consumption due to its pivotal role in economic growth and also aggregate demand and specially its long-run analysis have always been in the center of attention.In this study, we have estimated private consumption function, using ARDL approach and employing annual RAPID MASS BOSTON CREAM PIE data during 1978-2012.Short-run elasticity of private consumption function regarding to its lag is 0.50 and to GDP is approximately 0.

56.Also, the latter amount for long-run elasticity is Sewing Boxes 1.13.Furthermore, the estimation demonstrates a negative correlation between inflation and private consumption in both long-run and short-run relationships.

ECM is estimated as well, and the coefficient is equal to -0.49 which shows the pace in which the private consumption function adjusts to its long-run equilibrium.Keywords: Consumption function, ARDL approach, ECM JEL Classifications: C13 C22 E21.