Consumption per effective labour in Brazil: testing for the optimising behaviour. (21st October 2022)

• Record Type: Journal Article
• Authors: Moreira, Ricardo Ramalhete
• Is Part Of: International journal of computational economics and econometrics. Volume 13:Number 1(2023)
• Page Start: 23
• Page End: 34
• Publication Date: 2022-10-21
• Subjects: consumption -- households -- interest rate -- income -- Brazil; Econometrics -- Periodicals; Economics -- Data processing -- Periodicals; 330.01519505
• Languages: English
• ISSNs: 1757-1170

Abstract

We contributed to the literature on household consumption in specific ways: firstly, we adopted a long-run cointegration analysis instead of a first-difference one, which was conventional in previous works; second, by building on monthly data, we enlarged the number of observations of our sample, thus overcoming a common problem of low-frequency data in studies based on quarterly or annual time series. We thus confirmed the hypothesis of an optimising behaviour in consumption for the Brazilian economy, although jointly with a relevant role of income. We also inferred the effect of risk aversion in lowering the optimality of consumption after the Subprime crisis period, based on a Markov-switching approach.