Munich Personal RePEc Archive

Long-run relationship between real consumption and real income in the Russian Federation: An ARDL bounds testing approach

Polbin, Andrey and Kuroedova, Anastasiia (2020): Long-run relationship between real consumption and real income in the Russian Federation: An ARDL bounds testing approach.

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Abstract

This paper considers an application of the ARDL model and bounds testing approach to the analysis of the long-run relationship between household consumption and aggregate income. We have explored the presence of a long-run relationship between real household consumption and indicators characterizing real income, such as: real gross domestic product (GDP), real gross domestic income (GDI), and GDP at constant household consumption prices. We provide statistical evidence of the lack of a long-run relationship in the first and second cases and its presence in the third case. We have concluded that the nominal GDP deflated by the price index of aggregated consumption is the most applicable indicator for describing the dynamics of real consumption in the Russian Federation.

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