Long Run Determinants of Private Consumption Spending: Evidence from Nigeria

Joseph Chukwudi Odionye
2019 Journal of Business and Economic Development  
Of great concern to policy makers and researchers are the factors that influence private consumption spending owing to the important role it plays in aggregate demand of a country. Thus, this study investigated the long run determinants of aggregate private consumption spending in Nigeriaover thequarterlyperiodsof 1981 to 2016. The Auto Regressive Distributed Lag Error-correction model (ARDL-ECM) was employed to take care of short-run dynamics. In line with theories, variables included in the
more » ... del were disposable income, credit facility, financial assets, government expenditure, interest rate and inflation rate. The empirical results showed that in the short run, disposable income, financial assets, interest rate and government expenditure influence private consumption spending while disposable income, financial assets, credit facilities and government expenditures are the major long run determinants of private consumption spending in Nigeria. The result equally showed that disposable income has more impact on consumption spending in the long run than it has in the short run. The policy implication is that policy interventions directed towards these variables are essential to increase spending as a major component of aggregate demand.
doi:10.11648/j.jbed.20190401.14 fatcat:jsspdtawufg4pko6ld3spn7hzu