Estimating the consumption spending function in Algeria using the relative income theory for the period (1975-2018)‎

Abstract EN

This study aims to estimate the consumption spending function using the theory of relative income in Algeria for the period (1975/2018), by focusing on the following variables: consumption spending, disposable personal income, the highest previous income.

To complete this study, we should conduct Vector Autoregressive model VAR, Grange causality test, study response function and analyze variance components.

The study concludes that the variables explain the consumption spending for the current year by 99.

86%, and that creating any random shock in the disposable personal income affects consumption spending directly and positively and becomes negative starting from the fifth year, while causing a random shock at the highest previous income affects consumption spending directly and positively during the study period.