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PER CAPITA CONSUMPTION EXPENDITURE AND PERSONAL DISPOSAL INCOME IN INDIA-AN ECONOMETRIC ANALYSIS

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Author(s): Lingaraj Mallik, | Kalandi Charan Pradhan

Journal: International Journal of Economics and Research
ISSN 2229-6158

Volume: 03;
Issue: 02;
Start page: 96;
Date: 2012;
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Keywords: Consumption Expenditure | Granger Causality | Augmented Dickey Fuller Test | Koyck Approach.

ABSTRACT
The present study has made an attempt to analyze the causal relation between percapita consumption expenditure and personal income in India by applying Granger Causality and Koyck approach has been used to estimate the time period for adjustment of percapita personal consumption expenditure on personal disposal income for the period of 1950 to 1993. Data are extracted from National Accounts Statistics and Central Statistical Organization,Government of India. The study found that there is a unidirectional causality runs from percapita consumption expenditure to personal disposal income in case of India. The Koyck Model extends that the mean lag is 30 percentages which represents percapita personal consumption expenditure adjusts to personal disposal income within a relatively long period of time. We found that one percentage change in percapita disposal income that leads to 16 percentage of response in percapita personal consumption expenditure of the peoples which again extends that the major part of the income has been spend on consumption expenditure of the people in India extending very negligible share in saving.
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