Consumption expenditure: an econometric analysis for Bangladesh
Date
1980-07
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Abstract
Aggregate consumption (or aggregate savings) as a function of aggregate income, generally termed as consumption (or saving) function plays a central role in macroeconomic analysis after Keynes made it a keystone in the General Theory. This study is aimed at explaining consumption behavior in Bangladesh by utilizing time series data on aggregate income, consumption and other macroeconomic variables for the period 1959-60 to 1976-77. Besides the traditional Keynesian consumption function and two versions of Friedman's permanent income hypothesis, some other behavioral relationships are estimated and subjected to economic analysis.
The time period used in this study covers both pre and post independence years which are characterized by different socioeconomic and political situations. These changes are reflected by the observed loss of a secular trend in our time series. In order to capture the effects of such changes pre and post independence patterns of consumption are examined. The stability of the estimated behavioral relationships and the concerned parameters are also tested.