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A confirmatory analysis of the unit root hypothesis for OECD consumption-income ratios

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  • Diego Romero-Avila

Abstract

This article investigates the existence of a unit root in the consumption-income ratio for a sample of 23 OECD countries over the period 1960 to 2005. For that purpose, we first use recently developed unit root tests with good size and power. Second, we employ the more powerful panel unit root tests of Pesaran (2003) and Smith et al. (2004) that take the null of nonstationarity and a bootstrap version of the test of Hadri (2000) that takes stationarity as the null hypothesis. Overall, our confirmatory analysis renders clear-cut evidence that OECD consumption-income ratios contain a unit root.

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  • Diego Romero-Avila, 2008. "A confirmatory analysis of the unit root hypothesis for OECD consumption-income ratios," Applied Economics, Taylor & Francis Journals, vol. 40(17), pages 2271-2278.
    • Handle: RePEc:taf:applec:v:40:y:2008:i:17:p:2271-2278
    DOI: 10.1080/00036840600949447
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    5. Chudy, R.P. & Hagler, R.W., 2020. "Dynamics of global roundwood prices – Cointegration analysis," Forest Policy and Economics, Elsevier, vol. 115(C).
    6. Shu‐Yi Liao & Lan‐Hsun Wang & Mao‐Lung Huang, 2019. "Does More Consumption Promote Real GDP Growth?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 66(3), pages 384-403, July.

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