Consumption Behaviour in Zambia: The Link to Poverty Alleviation?

K. Ludi: consumption behaviour in Zambia

The actual coefficients for the regression of equation (1) can be found in table 2.

Table 2: Regression results of the cointegration equation (dependent variable: LN_CONS_ZK)

Sample (adjusted): 1971 2001 Included observations: 31 after adjustments
Variable	Coefficient	Std. Error	t-Statistic	Consistent with Expectations?	Interpretation⁸
LN_GDP_ZK	0.999958	0.001639	610.0092	Yes	An increase in national income will increase PCE. The effect is much larger than that of the other independent variables.
R_LENDRATE	-0.002285	0.000585	-3.903330	Yes	An increase in short-term lending rates will increase the costs of consumption, and thus decrease PCE.
DUM_92	-0.309545	0.038157	-8.112476	Yes	The dramatic decline in PCE in 1992, will have an overall decreasing effect on the aggregate PCE function.
R-squared 0.713131 Adjusted R-squared 0.692640

An Augmented Dickey Fuller (ADF) unit root test was performed on the residuals of the
cointegration equation, and it was concluded that the residuals are indeed stationary.⁹

4.2. The Error Correction Model (ECM)

The ECM represents the short-term relationship between the data series, and is based on
the proposition that a proportion of any disequilibrium from one period can be corrected
in the next period. Long-run effects are included in the short-run equation via the lagged
residuals of the cointegrating equation (res_coint).

Attempts to estimate equation (2) as the ideal short-term situation were statistically
fruitless. Thus, other short-run factors were included to be statistically successful and

Due to the non-stationarity of the variables, the magnitudes of the coefficients cannot be
stringently evaluated, and the variables may not be statistically evaluated.

See Appendix B for the unit root tests of the cointegrating residuals.

More intriguing information

1. Contribution of Economics to Design of Sustainable Cattle Breeding Programs in Eastern Africa: A Choice Experiment Approach
2. Fortschritte bei der Exportorientierung von Dienstleistungsunternehmen
3. Neighborhood Effects, Public Housing and Unemployment in France
4. Trade Openness and Volatility
5. Visual Perception of Humanoid Movement
6. Heterogeneity of Investors and Asset Pricing in a Risk-Value World
7. Integrating the Structural Auction Approach and Traditional Measures of Market Power
8. Experience, Innovation and Productivity - Empirical Evidence from Italy's Slowdown
9. Fertility in Developing Countries
10. Sex differences in the structure and stability of children’s playground social networks and their overlap with friendship relations