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The short-run and long-run behaviour of personal consumption in Croatia

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  • Ksenija Dumičić
  • Anita Časni
  • Irena Palić

Abstract

In this paper cointegration and error correction models are used to explore the long run and short run behavior of personal consumption in Croatia as a function of income, house prices and total credit to households. The results of the analysis showed that income (approximated by net real wage), house price and total credits to households play an important role in determining personal consumption. Also, lagged values of house prices showed significant impact on consumption, suggesting house price persistence. The most likely factors driving the house price persistence may include expectations and idiosyncratic institutional characteristics like illiquid real estate markets, inadequate property rights protection, high transaction costs, and underdeveloped financial instruments. Copyright Springer-Verlag 2013

Suggested Citation

  • Ksenija Dumičić & Anita Časni & Irena Palić, 2013. "The short-run and long-run behaviour of personal consumption in Croatia," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(1), pages 3-11, June.
    • Handle: RePEc:spr:cejnor:v:21:y:2013:i:1:p:3-11
    DOI: 10.1007/s10100-012-0254-7
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    References listed on IDEAS

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    1. Tibor Csendes & Lidija Zadnik Stirn & Janez Žerovnik, 2013. "Editorial," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(1), pages 1-2, June.

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