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Paper Information

Journal:   KNOWLEDGE AND DEVELOPMENT   2006-2007 , Volume - , Number 19; Page(s) 199 To 218.
 
Paper: 

ERROR CORRECTION MODEL FOR PRIVATE CONSUMPTION IN IRAN

 
 
Author(s):  ZARRA NEZHAD M., LORAKI BAKHTIARI M., DAVIDEH A.A.K.
 
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Abstract: 

This article aims at analyzing and estimating the function of private consumption and it's long-run relation using error correction model in Iran's economy. To avoid spurious regression we proceeded first by exploring the long-run co-integrating private mechanism to estimate the short-run equation. Since there may be a weakness associated with the Engle-Granger method of co-integration testing, we investigated the cointegration relationship by using Johansen co-integration test. We found strong evidence from the Johansen test that the related variables are integrated. The empirical evidence suggests that the tendency toward consumption is 83% and the speed of adjustment for the long-run private consumption is around 73% implying that about 73 percent of differences between the short-run and long-run consumption level will be adjusted within one year.

 
Keyword(s): PRIVATE CONSUMPTION, IRAN'S ECONOMY, JOHANSEN COINTEGRATION, ERROR CORRECTION MECHANISM
 
References: 
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