K. Ludi: consumption behaviour in Zambia
13
since total GDP was used as a proxy for disposable household income - which will
obviously lead to slightly misleading results.
Using the adjusted coefficients above, it is possible to interpret the elasticities of PCE, as
is done in table 7.
Table 7: Elasticities of private consumption expenditure to income and short-term lending rates
Variable |
Elasticity |
Interpretation |
LN_GDP_ZK |
1.000211 |
I An increase in income of 10 per cent will increase |
R_LENDRATE |
-0.002053 |
i An increase in interest rates of 5 per cent will decrease |
5. Analysis of the Results
It is clear that the marginal propensity to consume (MPC) of 1 in Zambia is extremely
high. Approximately all additional income received by individuals is spent on
consumption. This has a very significant impact on savings, as evidently Zambia suffers
from almost zero private savings. This MPC figure is higher than the APC for the year
2001 (0.66). Again this represents a very worrying structural phenomenon, as there are no
stabilising effects in the economy.
2001 levels of the independent variables (R_LENDRATE and LN_GDP_ZK) of equation
(1), the long-run equation, can be substituted into the adjusted cointegration equation
(table 6), so as to estimate a value for PCE, LN _ CONS _ ZK , to be compared to the
current poverty levels in Zambia. Table 8 shows the results of this approach (all figures in
millions of Zambian Kwatchas).
More intriguing information
1. The name is absent2. The name is absent
3. NEW DEVELOPMENTS IN FARM PRICE AND INCOME POLICY PROGRAMS: PART I. SITUATION AND PROBLEM
4. Agricultural Policy as a Social Engineering Tool
5. Convergence in TFP among Italian Regions - Panel Unit Roots with Heterogeneity and Cross Sectional Dependence
6. L'organisation en réseau comme forme « indéterminée »
7. Wounds and reinscriptions: schools, sexualities and performative subjects
8. A Study of Adult 'Non-Singers' In Newfoundland
9. Economic Evaluation of Positron Emission Tomography (PET) in Non Small Cell Lung Cancer (NSCLC), CHERE Working Paper 2007/6
10. Retirement and the Poverty of the Elderly in Portugal