Title: Consumption per effective labour in Brazil: testing for the optimising behaviour

Authors: Ricardo Ramalhete Moreira

Addresses: Federal University of Espírito Santo (UFES), Av. Fernando Ferrari, 514, Goiabeiras, Vitória, ES, 29075-910, Brazil

Abstract: We contributed to the literature on household consumption in specific ways: firstly, we adopted a long-run cointegration analysis instead of a first-difference one, which was conventional in previous works; second, by building on monthly data, we enlarged the number of observations of our sample, thus overcoming a common problem of low-frequency data in studies based on quarterly or annual time series. We thus confirmed the hypothesis of an optimising behaviour in consumption for the Brazilian economy, although jointly with a relevant role of income. We also inferred the effect of risk aversion in lowering the optimality of consumption after the Subprime crisis period, based on a Markov-switching approach.

Keywords: consumption; households; interest rate; income; Brazil.

DOI: 10.1504/IJCEE.2023.127291

International Journal of Computational Economics and Econometrics, 2023 Vol.13 No.1, pp.23 - 34

Received: 10 Mar 2021
Accepted: 05 Jul 2021
Published online: 30 Nov 2022 *