Is the consumption-income ratio stationary in African countries? Evidence from new time series tests that allow for structural breaks

Citation

Solarin, Sakiru Adebola and Shahbaz, Muhammad and Stewart, Chris (2018) Is the consumption-income ratio stationary in African countries? Evidence from new time series tests that allow for structural breaks. Applied Economics Letters, 50 (38). pp. 4122-4136. ISSN 1350-4851

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Abstract

This article examines whether the consumption-income ratio is stationary in 50 African countries. We use the residual augmented least squares (RALS-LM) unit root test that allows for structural breaks. The empirical evidence shows that the consumption income ratio is stationary around structural breaks in most (44 out of 50) African countries. This is consistent with the predictions of most economic theories. The general finding of mean reversion implies that (policy) shocks are likely to have only temporary effects on the consumption-income ratio in most African countries

Item Type: Article
Uncontrolled Keywords: Income distribution, Consumption-income ratio, African countries, unit root tests, structural breaks
Subjects: H Social Sciences > HB Economic theory. Demography > HB522-715 Income. Factor shares
Divisions: Faculty of Business (FOB)
Depositing User: Ms Rosnani Abd Wahab
Date Deposited: 11 Nov 2020 12:00
Last Modified: 11 Nov 2020 12:00
URII: http://shdl.mmu.edu.my/id/eprint/7334

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