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Original scientific paper

Stochastic properties of the consumption-income ratios in central and eastern European countries

Giray Gozgor ; International Trade and Business Dogus, Kadikoy-Istanbul, Turkey


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Abstract

This paper aims to investigate stochastic properties of the consumption-income ratios in eleven central and eastern European (CEE) countries: Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. The heterogeneous panel unit root tests are used to account for cross-sectional dependence and the Modified Augmented Dickey-Fuller unit root test over the period March 1997 – September 2012. The half-lives are also calculated as to find the strong mean-reversion in the consumption income ratio for nine of eleven CEE economies; and the exceptions are Croatia and Slovenia. In other words, empirical findings provide significant support for the existence of hypothesis that the consumption-income ratio is a mean reversion. Accordingly, the policy implications have permanent effects on the consumption of households only in Croatia and Slovenia.

Keywords

The consumption-income ratio; Central and eastern European economies; Panel unit root tests; Cross-sectional dependence; Half-life

Hrčak ID:

112387

URI

https://hrcak.srce.hr/112387

Publication date:

20.12.2013.

Article data in other languages: croatian

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