The short‐run and long‐run behaviour of personal consumption in Croatia

The short‐run and long‐run behaviour of personal consumption in Croatia

0.00 Avg rating0 Votes
Article ID: iaor20132653
Volume: 21
Issue: 1
Start Page Number: 3
End Page Number: 11
Publication Date: Jun 2013
Journal: Central European Journal of Operations Research
Authors: , ,
Keywords: Croatia, consumer behaviour
Abstract:

In this paper cointegration and error correction models are used to explore the long run and short run behavior of personal consumption in Croatia as a function of income, house prices and total credit to households. The results of the analysis showed that income (approximated by net real wage), house price and total credits to households play an important role in determining personal consumption. Also, lagged values of house prices showed significant impact on consumption, suggesting house price persistence. The most likely factors driving the house price persistence may include expectations and idiosyncratic institutional characteristics like illiquid real estate markets, inadequate property rights protection, high transaction costs, and underdeveloped financial instruments.

Reviews

Required fields are marked *. Your email address will not be published.