Analysis of the interaction between household consumption expenditures and borrowing preference in the framework of behavioral macroeconomics

Economic development and income level rise, increased communication and economic interactions have led to increased preferences in consumption and a continuous process of preferences in household consumption expenditures. A result, the effect of changes in environmental, psychological factors, heuristics and cognitive states, especially on the preferences and decisions of households, has started to be decisive on the economic conjuncture by leading to changes in consumption expenditures from a macroeconomic point of view. When household deciding on consumption, the presence of a preference for consumption expenditures made debt stock a major variable, affecting this preference of the household as a macroeconomic variable. The process that emerged for the financing of household consumption expenditures caused the effects and results of macroeconomic policies to be asymmetrical. In this framework, the relationship between household consumption expenditure and borrowing, which is a preference for meeting it in a certain time period, and the parameters of macroeconomic variables, which are the main determinants of the size and severity of interaction, should be estimated. Because it provides information that will enable the analysis of consumption behavior from a macroeconomic perspective. From this point of view, in this study, the relationship in question is analyzed with a panel data model based on the intertemporal substitution elasticity approach. In addition, the application also analyzes the heterogeneity between households by country, under the assumption of non-homothetic consumer preferences. Quarterly data for the years 1998Q1-2020Q3 were used in the analysis. The study, OECD countries' household income, household expenditures, inflation, interest rates and government bond interest rates and panel data, GMM model and club convergence model analysis tools were used.