Exploring the Long-Run Relationship between GDP and Private Consumption of Romania through Cointegration Analysis
The Romanian economy has been for a long time based on household consumption, as the private consumption accounts for more than 60% of GDP. The dependence between GDP and private consumption is of great importance for macroeconomic policies and has been extensively analyzed through econometric methods but the literature lacks studies of their long-run comovement by cointegration analysis. This paper examines the long-run relationship between GDP and private (household) consumption of Romania through cointegration analysis procedure. Results from the unit root tests reveal relatively conflicting outcomes and the Engle-Granger two-step residual-based cointegration procedure shows that GDP and household consumption do not share a longrun equilibrium relationship for the case of Romania in contrast with the expected results of the economic theory.
Year of publication: |
2014
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Authors: | Raluca-Maria, Bãlã |
Published in: |
Ovidius University Annals, Economic Sciences Series. - Facultatea de Ştiinţe Economice, ISSN 1582-9383. - Vol. XIV.2014, 1, p. 257-262
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Publisher: |
Facultatea de Ştiinţe Economice |
Subject: | Cointegration | GDP | Household Consumption | Engle-Granger |
Saved in:
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