The Response of Consumption to Alternative Measures of Financial Development and Real Interest Rate in a Sample of Central and East European Countries

Abstract

The paper focuses on investigating the relationship between (gdp share of) consumption and, two alternative measures of financial development and real interest rate using a sample of eight Central and East European countries for the period of 1993-2010. The panel estimation of two alternative regression equations for consumption suggested that the direction of the net effect of financial development on consumption can vary depending on the measure of financial development chosen. Specifically we found out that while the ratio of broad measure supply of money supply (M2) to gdp has a negative (and statistically significant) effect on consumption, the effect of the ratio of domestic credit to gdp is positive but statistically insignificant. Furthermore, the estimation results have produced evidence of a positive (and statistically significant) effect of real interest rate on consumption. And finally the per capita real gdp and growth rate of real gdp have been found to be (statistically) insignificantly associated with consumption.

Financial Development and Consumption

“…Based on Çiftçioğlu and Almasifard (2015), financial development has a statistically significant negative effect on consumption when it is proxied by the ratio of money and quasi-money to GDP [8]. However, Almasifard (2013) has not been able to detect a similar effect on consumption in case of the ratio of domestic credit to GDP.…”

Gender wage gap in selected developing upper-middle income countries

“…Several influential studies like Winters and Greenaway (1994); Winters (2004); Wagner (2007); Giles and Williams (2000) and Singh (2010) have reviewed the macroeconomic and microeconomic facts on the relationship between international trade and economic growth and reinforced the theoretically mixed and time inconsistent support for the gains from trade. The nature of the results are (in general) mixed and contradictory suggesting that the macroeconomic effects of financial development can vary across countries and the sample period chosen (Çiftçioğlu and Almasifard, 2015). The simple prediction from Stolper–Samuelson theory has been the subject of very rich empirical research in recent years.…”

Water Quality Assessment in Terms of Water Quality Index (WQI): Case Study; Gorganroud River, Golestan Province, Iran

“…It should be mentioned that any change in the level of economic and financial development of a country has direct and indirect effect on the well-being of individuals who are living in that country, so evaluating these resources is really crucial [1] [2]. Safe water is one of the essential requirements for the life of human beings, which requires quality control by means of laboratory tests and different indices for controlling it [3].…”