Tests of Nonlinear Consumption Functions: The Case of Korea, Taiwan, Thailand and India

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Abstract

In this study, the permanent-income hypothesis and the Keynesian consumption function for four Asian countries are considered. The MPCs for Korea and Taiwan characterized by rapid economic growth have been on the decline, whereas the MPCs for Thailand and India with moderate or low economic growth “have been stable. The decline in MPCs and rise in MPSs, in turn, are expected to facilitate government debt financing domestically and/or improve trade balance account. The real interest rate is found to be negative and significant only for India, suggesting that the government may use monetary policy to encourage saving. [E 21, O 11].

Original languageEnglish
Pages (from-to)71-81
Number of pages11
JournalInternational Economic Journal
Volume8
Issue number2
DOIs
Publication statusPublished - 1994 Jun 1

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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