Estimating total consumption function in the palestinian economy for the period (1994*2016)‎

Abstract EN

This study aimed to estimating the aggregate final consumption function in the Palestinian economy in the period (199 -2016).

The study also aimed at highlighting the reality of consumption in the Palestinian Territories and building an econometric model that illustrates the relationship between the aggregate final consumption per capita as a dependent variable.

And the per capita aggregate disposable income.

Aggregate saving and public debt in addition to political stability as independent variables.

The descriptive approach was used to present the theoretical concepts related to consumption and to highlight the most important factors affecting it.

The researcher analyzed the development of final consumption and its components in Palestine.

And the determinants of this consumption during the study period.

The quantitative approach was used to construct an econometric model for estimating the consumption function in the Palestinian economy by using the statistical program EViews.9.

The study concluded that there is a high consumption tendency in the Palestinian Territories during the study period because of their exceptional circumstances, where the final consumption contribution in the Gross Domestic Product reached 122%.

The study concluded that there is a positive relationship between the dependent variable, which is (aggregate final consumption per capita.

and the independent variables, which are (aggregate disposable income, public debt) per capita.

However, the relationship was negative between each of the independent variables (aggregate saving per capita, political stability) and the dependent variable.

The adjusted coefficient of R-Square was (99.13%).

This means that the independent variables included in the estimated model account for 99.13% of the change in the dependent variable.

The remaining ratio is due to other independent variables, which were not included in the model, in addition to the random error in the estimation.

The study presented several recommendations, including the need to develop economic policies that promote the increase in production at the expense of consumption.

There is also a need to enhance the awareness of the Palestinian society about the importance of consumption rationalization and the importance of saving.

The Palestinian Authority should work to formulate policies that limit the effect of Israeli occupation on the Palestinian society aspect of life, and adjust consumption determinants in a way that reduces both budget deficit and public debt rates.