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Private Consumption Expenditure in the Eastern Caribbean Currency Union

Author

Listed:
  • Sutherland, Richard
  • Craigwell, Roland

Abstract

This paper innovates by being the first to estimate a consumption function of a monetary union as a single entity. It is also the first empirical consumption research on the Eastern Caribbean Currency Union (ECCU). Due to the open nature of these nations it further adds to the literature by examining open economy variables like the terms of trade and the degree of export orientation. The panel dynamic least squares method employed indicates that private spending is primarily driven by income, financial wealth, the interest rate, terms of trade and the degree of export orientation.

Suggested Citation

  • Sutherland, Richard & Craigwell, Roland, 2011. "Private Consumption Expenditure in the Eastern Caribbean Currency Union," MPRA Paper 40932, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40932
    as

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    File URL: https://mpra.ub.uni-muenchen.de/40932/1/MPRA_paper_40932.pdf
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    References listed on IDEAS

    as
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    4. Lee, Joong-Koon, 1971. "Exports and the Propensity to Save in L.D.C.s," Economic Journal, Royal Economic Society, vol. 81(322), pages 341-351, June.
    5. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    6. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    7. Breitung, Jorg, 2002. "Nonparametric tests for unit roots and cointegration," Journal of Econometrics, Elsevier, vol. 108(2), pages 343-363, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Consumption function; panel dynamic OLS; monetary union;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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