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

Author

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  • Sakiru Adebola SOLARIN

    (Multimedia University Malaysia, Melaka, Malaysia.)

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.

Suggested Citation

  • Sakiru Adebola SOLARIN, 2017. "The Stationarity of Consumption-Income Ratios: Nonlinear Evidence in ASEAN Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 109-123, June.
    • Handle: RePEc:rjr:romjef:v::y:2017:i:2:p:109-123
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    References listed on IDEAS

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    More about this item

    Keywords

    consumption–income ratio; unit root tests; nonlinearity; cross-sectional dependence; ASEAN countries;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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