A Study on the Permanent Income Hypothesis: A Case of 12 Stylized Facts | Chapter 2 | Modern Perspectives in Economics, Business and Management Vol. 5

 The contents of this note are based on three estimates of the Marginal Propensity to Consume (MPC): a high measure derived from the long run relationship between consumption and income, a low measure derived from the MPC relation's intermediate run, and an actual measure derived from current consumption and income values. The goals are to determine the actual regularities in the statistical distribution and behaviour of steady state consumption, as a function of the MPC estimation method. The note calculates the implied steady state variables, and then recovers high, low, and actual measurements of consumption growth rates. A close examination of the results shows 12 stylised realities that are implied by the steady state's basic progress. These details include the consumption series' level connections, variances, and growth rates, as well as their statistical distributions. As a result, the note goes into great detail about the stylized facts that any model of the perpetual income hypothesis must explain and support.

Author (S) Details

Samih Antoine Azar
Faculty of Business Administration and Economics Haigazian University Beirut, Lebanon.

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An Approach of Nigeria Consumption Function – An Empirical Test of the Permanent Income Hypothesis | Chapter 9 | Current Strategies in Economics and Management Vol. 2

Consumption plays a significant role in determining the size of the multiplier and the dynamic effects of the economy shock. It also constitutes the largest component of the aggregate expenditure of an economy. As a result, economists have propounded theories in a bid to explain the determinants of consumption. These theories include the absolute income hypothesis by Keynes, relative income hypothesis (RIH) by Duesenberry, permanent income hypothesis (PIH) by Friedman, and the lifecycle hypothesis (LCH) by Modigliani. The objective of this study is to test the performance of the PIH as a description of consumption expenditure in the Nigerian economy using annual time series data over the period 1980-2015. Using the Partial Adjustment Model (PAM) and the Adaptive Expectation Model (AEM) the study found that there exist a long-run relationship between consumption and income thus suggesting that consumption function under the PIH holds for the Nigerian economy.

Author (s) Details

Ikechukwu Kelikume
Lagos Business School, Pan-Atlantic University, Lagos, Nigeria.

Faith A. Alabi
University of Benin, Benin-city, Nigeria.

Friday Osemenshan Anetor
University of Lagos, Akoka, Nigeria.

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