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Are Aggregate Consumption Relationships Similar Across the EU?

Author

Listed:
  • Alan Carruth
  • Heather Gibson
  • Euclid Tsakalotos

Abstract

The answer to the question posed in the title of the paper may have some bearing on whether consumer spending will respond in similar ways to common shocks across the European Union. The DHSY model is implemented, its robustness and its commonality assessed for the 15 EU countries. The model performs encouragingly well across this group of countries, though there is evidence that the long run, unit elasticity restriction is not valid for a number of countries. Our results do not support the hypothesis of common aggregate consumption behaviour for these countries. Similar tests across four core countries, Germany, France, The Netherlands, and belgium, show greater conformity in the DHSY consumption estimates, as might be expected, but nevertheless the coefficient estimates are not similar at conventional significance levels.

Suggested Citation

  • Alan Carruth & Heather Gibson & Euclid Tsakalotos, 1996. "Are Aggregate Consumption Relationships Similar Across the EU?," Studies in Economics 9609, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:9609
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    Citations

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    Cited by:

    1. Andrew Hughes Hallett & Laura Piscitelli, 1999. "EMU in Reality: The Effect of a Common Monetary Policy on Economies with Different Transmission Mechanisms," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(4), pages 337-358, December.
    2. Chris Stewart, 2003. "An International Comparison Of Long-Run Consumer Behaviour," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 145-168, January -.
    3. Chris Stewart, 1998. "Reinterpreting the DHSY (1978) consumption function with hindsight," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 477-489.

    More about this item

    Keywords

    Consumer Spending; European Union; DHSY Model;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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