Investment Sustained by Consumption: A Linear and Nonlinear Time Series Analysis

Abstract

This paper studies the dynamic relationship between consumption and investment in the United States between 1947 and 2018. Our findings support the postulates of Keynesian economics-while they are contrary to the theoretic background on which the numerous empirical studies on the saving-investment nexus are based. We find a long-run nexus between consumption and investment, and positive linear Granger-causality running unidirectionally from consumption to investment. Therefore, investment is sustained by consumption. Further, we find that the variables have nonlinear structures and, thus, we apply nonlinear causality tests. We provide evidence of nonlinear causality running unidirectionally from consumption to investment. Nevertheless, after controlling for Government Expenditure, this nonlinear causal relationship disappears, indicating that Government Expenditure drives the nonlinear causal relationship between private consumption and investment. We argue that this finding is consistent with the notion that investment decisions are guided by permanent aggregate demand, because public expenditure allows private consumption to have a sufficiently permanent trajectory to be considered as a guide for investment decisions. Our results do not support the austerity and deflation measures implemented in the last years (especially in the European Union). On the other hand, our findings call for the incentive of final public expenditure, since it favours the long-run link between the private decisions to consume and invest.

A Harrodian Model that fits the Tourism-led Growth Hypothesis for Tourism-based Economies

“…On the other hand, in this paper the authors argue that the TLGH, which is analogous to the export-led growth hypothesis (see Thirlwall and McCombie, 2004;Thirlwall, 2019;McCombie, 2019) i , can also be coherently modelled in a demand-led growth framework. For the Sraffian Supermultiplier and New Kaleckian growth models, tourism demand is a component of autonomous demand, which ultimately determines the long-run growth path of the economy (see Serrano, 1995;Pariboni, 2016;Lavoie, 2016;Dejuán, 2017;Nah and Lavoie, 2019;Palley, 2019;and Perez-Montiel and Manera, 2019). Thus, demandled growth theory posits that tourism demand and long-run economic growth are necessarily connected.…”

Impact of consumption structure change on environmental efficiency from the perspective of investment

“…Gwozdz 等 [6] 、 张雪峰等 [7] 、 Zhang 等 [8] 分别从食物、 衣 着、 汽车、 能源使用等方面研究了消费者不同选择 行为带来的污染物种类和水平变化， 并强调可持续 消费方式的重要性； ③分析消费结构中各类消费支 出之间比例变化对环境的影响。Martinez 等 [9] 、 毛 克贞等 [10] 、 罗能生等 [11] 需机制、 乘数效应吸引投资进入对应产业， 推动投 资结构调整 [12][13][14] ； 另一方面， 居民消费需求是终端需 求， 投资需求是中间需求， 当居民消费结构朝向个 性化、 多样化、 环保化等方向转变时， 必然催生出满 足消费升级的新投资需求， 由此带来资源利用方式 和水平的改变， 进而影响环境 [15][16][17]…”

Erratum: Perez-Montiel, J.; Manera Erbina, C. Investment Sustained by Consumption: A Linear and Nonlinear Time Series Analysis. Sustainability 2019, 11, 4381

“…The authors would like to make the following corrections to the published paper [1]. The changes are as follows:…”