Original scientific paper
https://doi.org/10.1515/zireb-2015-0005
Modeling Real Private Consumption Expenditure in Bulgaria after the Currency Board Implementation (1997-2005)
Aleksandar Vasilev
; American University in Bulgaria, Bulgaria
Abstract
In this paper, an econometric model of consumption in Bulgaria for the period 1997-2005 is constructed. The Error-Correction Model (ECM) approach is employed and long-run relationship between household consumption and income was found. The primary purpose of this empirical paper is to get a better understanding of the factors driving household consumption in Bulgaria and to estimate a consumption function to be used for medium-term forecasting. It is shown that all households behave in a Keynesian way, basing their consumption decisions on current income.
Keywords
Keynesian consumption function; Permanent Income Hypothesis; Error Correction Model
Hrčak ID:
139021
URI
Publication date:
14.5.2015.
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