Do the Income and Price Changes Affect Consumption in the Emerging 7 Countries? Empirical Evidence Using Quantile Ardl Model

Abstract

Various empirical studies have been conducted. However, these studies fail to examine the asymmetric effect of income and price across different quantiles of consumption in the emerging 7 countries. This study extends the existing literature using a novel approach called the quantile ARDL model along with the standard nonlinear ARDL model. Findings based on the nonlinear ARDL model indicate that positive shocks in income positively and significantly affect consumption in the short- and long-run. On the other hand, negative shocks in income do not significantly affect consumption which, therefore, suggests an asymmetric effect of income on consumption. In addition, the quantile ARDL estimates indicate that income positively affects consumption across all quantiles of the consumption except the 95th quantile. Moreover, the quantile ARDL estimates indicate that price variations negatively affect consumption across all emerging 7 countries. These estimates suggest that devising policies without considering the asymmetric effect may lead to unfavorable consequences.

Dynamic analysis of the relationship between exchange rates and oil prices: a comparison between oil exporting and oil importing countries

“…Yet, the exchange rate fluctuations of Norway and Canada predominantly drive the volatility in crude oil prices. These findings align with the research conducted by Gohar et al (2022a) provide contrasting conclusions.…”

Carbon emissions and the rising effect of trade openness and foreign direct investment: Evidence from a threshold regression model

“…They found that CO2 emissions increase due to increased foreign trade openness. [ 42 , 43 , 6 , 44 ]; and [ 29 ] conducted a study in the context of the US, Canada, and other advanced and developing countries. Their findings indicate that foreign trade openness causes a reduction in CO2 emissions.…”

“…Therefore, the threshold regression is more suitable than the linear regression approach for foreign direct investment and foreign trade openness effect on the CO2 emissions for industrial sectors of India. The authors like [ 49 ] and [ 6 , 45 , 46 ] conducted studies in advanced countries. They concluded the significant effect of foreign direct investment and foreign trade openness on CO2 emissions.,…”

“…While using data from 1980 to 2014, Chen (2018) investigated the connection between foreign trade openness and per-capita carbon dioxide (CO2) emissions in India and concluded that trade openness reduces carbon dioxide emissions. [ 5 , 6 ]; and [ 29 ] broke down the environmental Kuznets curve into the scale, composition, and technology effects to analyze the effect of trade openness on US carbon emissions. Their research concluded that carbon dioxide emissions were lowered due to trade openness.…”

“…Nevertheless, international trade and foreign trade openness may have various relationships with carbon emissions in industries depending on the varying amounts of carbon emissions. Fourth, different types of data choices, selection of countries, and methodological approaches can produce contradictory views on carbon emissions, international trade openness, and FDI [ 5 , 6 , 7 ]. For example, Yang and Tian (2017), [ 8 ]; and [ 9 ] selected different areas, and [ 10 ] selected different countries.…”