Master of Science in Economics
Faculty / School
Faculty of Business Administration (FBA)
Department of Economics
Date of Submission
Dr. Mohammad Nishat, Institute of Business Administration, Karachi
MSECO Research Project
This study has investigated the long term causal relationship between consumption spending in Pakistan and wealth proxy variables using annual data obtaining from various renowned sources for the period 1960 to 2014. The wealth proxy variables included in this study are stock market, money wealth (M2), real estate and gold. The impact of these variables on the consumption expenditure is being determined using the ARDL approach. This co-integration methodology is introduced by Pesaran et al, (2001) and is considered best because of its capacity to handle small sample sizes and works effectively on variables of different order of co-integration. Results shows that real GDP per capita and money wealth per capita variables have positive associations with real consumption per capita. A negative and statistically significant at 5% results has been seen for precious metal return variables. The results of the stock market return estimated as a changes in general sales index are insignificant in the model while the real rent on housing investment is positively and significantly related with the real consumption per capita in Pakistan. ECM term is negative and significant at 1% significance level. In policy proposals we suggest that appropriate measures should be taken to increase the real GDP per capita and money wealth per capita whereas Govt. should supervise to increase the real rent on housing investment because of its importance.
Sultana, A. (2016). The impact of wealth and wealth proxies on consumption: a case study of Pakistan (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-mseco/1
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