The Estimation ofAggregate Consumption Function for High Income Countries

Manzoor Ahmed, Akhtar Baloch, Khalid Khan, Manzoor Hussain Memon

Abstract


Aggregate Real Private Consumption (ARPC) is one of the major components of the Gross Domestic Product (GDP)that contributes to specify any economy’s long term living standards. The contribution of ARPC stands on an average around 55%. It is therefore important to understand the components of the consumption which is almost more than half of the aggregate economic expenditure. The study is an attempt to make a case for developing countries to bring policy level changes in order to determine the consumption pattern of developing countries’ GDP. Using appropriate empirical model the study investigates the validity of Permanent Income Hypothesis (PIH) and Absolute Income Hypothesis (AIH)on ARPC for selected developed economies. The results of the study reveals that the important determinants of ARPC in the long-run are real GDP and wealth, while in the short-run they are real interest rate and unemployment rate.


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DOI: http://dx.doi.org/10.22555/pjets.v5i2.904

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Chief Editor

Prof. Dr. Tariq Rahim Soomro 
Dean
College of Computer Science & Information Systems

Editor

Dr. Muhammad Mansoor Alam
 Professor and Associate Dean
 College of Computer Science & Information Systems

Associate Editors

Engr. Syed Mubashir Ali
Senior Lecturer & Course Coordinator
College of Computer Science & Information Systems

Publication Coordinator
Humaira Kanwal

Editorial Advisory Board (Internal)

Dr. Syed Irfan Hyder
Dr. S.M. Aqil Burney
Dr. Ejaz Ahmed
Dr. Mohammad Irshad Khan
Dr. Shahid Amjad
Dr. Fatima Riaz
Dr. Insia Hussain
Dr. Dr. Ehsan Rehman
Dr. Imran Majid
Dr. Khurram Iqbal
Dr. Zeeshan Shahid
Dr. Seema Ansari
Dr. Sumaira Khan

 

Editorial Advisory Board (International)

Prof. Dr. Mazliham Mohd Su'ud, President, Universiti Kuala Lumpur, Malaysia
Prof. Dr. Ghassan Al-Qaimari, President, Emirates College of Technology, Abu Dhabi, UAE
Prof. Dr. Patrice Boursier, Universite de La Rochelle, La Rochelle, France
Prof. Dr. Mudassir Uddin, Professor, University of Karachi, Pakistan
Dr. Nadeem Doudpota, Associate Professor, Al-Baha University, KSA
Dr. Haithem Abdelrazaq Almefleh, Associate Professor, Yarmouk University, Yarmouk, Jordan
Dr. Saiful Islam Ansari, Assistant Professor, University of Tabuk, Saudi Arabia