On the Causal Relationship between Household Consumption and Economic Growth in Saudi Arabia

Abstract

This research paper explores the causal relationship between household consumption and economic growth over the period of 1980-2017. Hence, it applies the popular cointegration tests alongside the most common causality test. The empirical analysis shows the presence of a positive long run relationship between household consumption and economic growth. In specific, we find evidence revealing that a one percent increase in household expenditures on consumption would boost economic growth by 0.7 percent. Furthermore, causality analysis, based on Granger (1969) test, suggests that variation in household consumptions could explain changes in economic growth.

Determinants of economic growth regencies/cities in Jambi Province with dynamic panel data approach

“…The results of this study are not in accordance with Keynes's theory which explains that it can determine the level of the economy, namely aggregate demand, and household consumption is one of the components of aggregate demand. This study's findings are consistent with the research of Rasasi et al (2021) that household consumption has no significant effect on economic growth. This study's findings demonstrate that household consumption does not always have an impact on a region's economic growth because household consumption does not have a significant impact on economic growth.…”

Factors Effecting Private Consumption in India: An ARDL Approach

“…A change of 1% household consumption raised non-oil GDP by 0.70% for the period 1980–2017. Pertinent to the study is the fact that public sector wage bill represented approximately 50% of government expenditure (Rasasi et al, 2021). PFCE accounted for almost 58% of GDP.…”