Abstract

COVRI RIVERA, Daniele. Household final consumption function for Ecuador, period 2000-2017. Cuad. Econ. [online]. 2022, vol.41, n.87, pp.545-568.  Epub Jan 24, 2023. ISSN 0121-4772.  https://doi.org/10.15446/cuad.econ.v41n87.92260.

This paper studies the elasticity of the household final consumption function with respect to income for Ecuador in the period 2000-2017, using quarterly data. Initially, cointegrated models are considered; however, these do not meet the requirement of weak exogeneity or do not prove to be statistically significant. Then, the vector autoregressive (var) model demonstrates the positive effect of oil revenues and the negative effect of unemployment on consumption. Consumption is not linked to disposable income in the short or long term, so that expansionary economic policies are only justified to stimulate employment.

Keywords : Autoregressive distributed lag model; consumption function; permanent income hypothesis; vector error correction model.

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