Dynamics of Aggregate Consumption in Niger

This study attempts to analyse the relationship between consumption expenditure and income from 1960 to 2018 in Niger. We used the Dual Adjustment approach which models the dual co-movements of the variables, as an alternative to the traditional cointegration analysis that implicitly enforces a singular adjustment between the variables. Our results provide evidence on the existence of common Hodrick Prescott trend for income and consumption in Niger. The results also show a significant relationship between the transitory components of our variables. Overall, our results indicate that Dynamic Keynesian Consumption Function is valid for Niger. Our results also show that an increase in income leads to a decrease in the Average Propensity to Consume (APC) and hence increase in the Average Propensity to Save (APS). Furthermore, our findings suggest that an increase in public expenditure can help to stimulate the economic growth of Niger. Keywords: Household Consumption Expenditure, Income, Cointegration, Dual Adjustment