The Private Consumption Function in Saudi Arabia

American Journal of Business and Management Vol. 3, No. 2, 2014, 109-116 DOI: 10.11634/216796061403510

8 Pages Posted: 18 Jun 2014

See all articles by M. Ibrahim

M. Ibrahim

Aswan University, Department of Economics

Date Written: June 1, 2014

Abstract

This paper empirically estimates the critical parameters of private consumption function in Saudi Arabia for the period 1986-2008 by using dynamic ordinary least squares (DOLS) approach of Stock and Watson (1993). The analysis is based on time series from 1986 to 2008. Time series properties of the processes that generate the data be assessed to specify the order of integration for each series to satisfy the conditions of applying the DOLS procedure. The empirical results confirmed that there exists a significant relationship among the real private consumption in Saudi Arabia and both of real income and real interest rate, but an insignificant relationship with financial wealth . Our estimation results show that all variables have its theoretical expected sign (positive for real income and financial wealth, but negative for real interest rate).

Keywords: Saudi Arabia, private consumption function, DOLS estimation

JEL Classification: A21, B22

Suggested Citation

Ibrahim, Mohamed, The Private Consumption Function in Saudi Arabia (June 1, 2014). American Journal of Business and Management Vol. 3, No. 2, 2014, 109-116 DOI: 10.11634/216796061403510, Available at SSRN: https://ssrn.com/abstract=2452307 or http://dx.doi.org/10.2139/ssrn.2452307

Mohamed Ibrahim (Contact Author)

Aswan University, Department of Economics ( email )

Egypt, Aswan
Aswan, 81524
Egypt

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