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The Consumption Function: The Macroeconomic Factors that Determines it and its Variation across Countries
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2014 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Consumption is an important indicator of the economic situation in a country, and hence it is important to study its determinants. This study contributes to the literature estimating consumption functions by considering the time period covering the financial and euro crises, including more explanatory variables, and separating consumption of durables and non-durables. I use panel data for 20 OECD countries for the time period 1999-2012, and data for five individual countries, to investigate the determinants of consumption. I find that income is the main determinant of consumption, that consumption of durables is more reactive to changes in the explanatory variables than non-durables, and that consumers seem to be more reactive to changes in expected future income in periods of uncertainty.

Place, publisher, year, edition, pages
Keyword [en]
Consumption, Durables, Non-durables, Financial Crisis
National Category
URN: urn:nbn:se:uu:diva-219696OAI: oai:DiVA.org:uu-219696DiVA: diva2:702921
Available from: 2014-03-05 Created: 2014-03-05 Last updated: 2014-03-05Bibliographically approved

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