DO THE INCOME AND PRICE CHANGES AFFECT CONSUMPTION IN THE EMERGING 7 COUNTRIES? EMPIRICAL EVIDENCE USING QUANTILE ARDL MODEL

Author:

GOHAR RAHEEL1,BAGADEEM SALIM2,CHANG BISHARAT HUSSAIN3ORCID,ZONG MUYU4

Affiliation:

1. College of Business Administration, Al Yamamah University, Riyadh, Saudi Arabia

2. Faculty of Business Studies Arab Open University, Riyadh 11681 Saudi Arabia

3. Department of Management Sciences, Shaheed Zulifqar Ali Bhutto Institute of Science and Technology, Larkana, Pakistan

4. School of Law Shanghai University, 200444, Shanghai, China

Abstract

Various empirical studies have been conducted. However, these studies fail to examine the asymmetric effect of income and price across different quantiles of consumption in the emerging 7 countries. This study extends the existing literature using a novel approach called the quantile ARDL model along with the standard nonlinear ARDL model. Findings based on the nonlinear ARDL model indicate that positive shocks in income positively and significantly affect consumption in the short- and long-run. On the other hand, negative shocks in income do not significantly affect consumption which, therefore, suggests an asymmetric effect of income on consumption. In addition, the quantile ARDL estimates indicate that income positively affects consumption across all quantiles of the consumption except the 95th quantile. Moreover, the quantile ARDL estimates indicate that price variations negatively affect consumption across all emerging 7 countries. These estimates suggest that devising policies without considering the asymmetric effect may lead to unfavorable consequences.

Publisher

World Scientific Pub Co Pte Ltd

Subject

Economics and Econometrics,Finance,Business and International Management

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