Personal Consumption Expenditures, Personal Income, and CPI
1980 – 2011
April 24, 2010
Abstract
The goal of this paper is to estimate the relationship between personal consumption and personal income among all Americans over the past 30 years. The data includes annual records for the four variables between the years 1980 and 2011. I have analyzed this data using the Ordinary Least Squares Method and ran a regression analysis in order to observe the relationship between my variables. In my model, I have used Real Personal Consumption Expenditures (PCE) as my independent variable, while the dependent variable is Real Disposable Personal Income Per-Capita. As well, I included two explanatory variables in my model which are the
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3. Empirical Model and Data
Using a multiple regression model, I estimated the relationship among my time-series data in order to learn more about my hypotheses. C = 0 + 1 *RDPI + 2*CPI + 3*CI C = -3.540 + 3.339(RDPI) +6.888(CPI) +2.315(CI) + ei Where: C= Personal Consumption Expenditures RDPI= Real Disposable Income: Per-Capita CPI= Consumer Price Index (Inflation) CI= Coincident Index Using Tinn-R, I came up with the following results. The Coefficients for this model are as follows: Estimate Std. Error t value Pr(>|t|) (Intercept) -3.540e+03 3.383e+02 -10.466 3.49e-11 *** RDPI 3.339e-01 3.903e-02 8.555 2.68e-09 *** CPI 6.888e+00 3.061e+00 2.250 0.0325 * CI 2.315e+00 4.713e+00 0.491 0.6271 As can be observed through these results, the t-values for both RDPI and CPI are greater than |1.96|. Therefore, both of these variables are statistically significant and consequently have an effect on Personal Consumption Expenditures. However, the t-value for the coincident index is not statistically significant, which means that we cannot conclude that it affects consumption. It can be assumed through this regression model that as personal income increases by 1 unit, consumption increases by 3.339 units. As well, as PCE increases by one unit it can be assumed that PCE will increase by 6.888 units. Therefore, I can
The economy of Brazil is in the top ten largest economies along with the United States. It is the biggest in Latin America. Actually it is the seventh largest in the world. Brazil has used its newly found economic mechanism to syndicate its outcome in South America and show more of a role in the Global Businesses. The Obama Administration’s National Security Strategy recognizes Brazil as a developing center of effect, and greets the management of the country’s joint and global issues. The United States and Brazil associations mostly have been good in the recent years. But Brazil has other strengthening relations with neighboring countries and expanding ties with nontraditional partners in the South that’s developing.
When it comes to the data and methods, this study used the Federal Reserve Board’s Survey of Consumer Finances (SCF), which is a repeated survey that includes the information on household income and wealth holdings; the Federal Reserve conducts this survey every three years. To test the hypothesis there are
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1. Suppose that there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. Present production is:
The price of gasoline is definitely driven by the concept of supply and demand. When prices fall, quantity demand will rise, when price rises, quantity demanded will fall. This statement is true in most cases. But gasoline is a necessity to most Americans. The demand for fuel does not decrease when the price increase. Consumers often influence the price of gasoline. Gas prices in the late spring and summer months are the highest during the entire year. These are the periods when consumers drive the most. This is the time when most construction and manufacturing jobs are in operation. Like now, in the winter, gas prices are at the lowest point in a six month period. The six-month gasoline price chart I
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Consumer expenditures rising during this term will move the aggregate demand curve to the right as increased spending increases demand. This BLS report indicates that the next term should show statistical aggregate demand increases, and according to the Classical model perspective encourages a laissez-faire approach concerning correction of the long-term economic factors (Colander, 2010). The Classical model works perfectly as consumer expenditures are trending on the rise when factoring consumer expenditures. Until a more apparent downturn shows itself, the invisible hand should continue to work naturally.
The Federal Reserve Board’s Survey of Consumer Finances (SCF) is a triennial cross-sectional survey of U.S. families. The study is sponsored by the Federal Reserve Board in collaboration with the Department of the Treasury. The survey data include information on family incomes, net worth, balance sheet components, credit use, pensions, income, and demographic characteristics (Bricker, et al., 2014). A strong attempt is made to select families from all economic levels. In addition, information is also included from related surveys of pension providers and the earlier surveys conducted by the Federal Reserve Board. Data from the Survey of Consumer Finances is utilized by the Federal Reserve and other branches of the government to conduct analysis. In addition, economic research centers utilize the SCF to conduct scholarly work (Board of Governors, 2014).
This paper is an effort to study the change in consumption pattern of consumer durables and its effects on the Indian economy. It tries to establish a relation between the growth of consumer durables industry and the overall growth of the economy i.e. the change in consumption of these goods
For this study, Demand is the request of the patient for medical care services. The physician demand estimates are based on recent healthcare utilization and healthcare delivery patterns. In determining this, health care use is translated into the demand for physician services, and then into demand for physicians. Current patterns of utilizing physician services is regarded as the level of services for which the U.S. is able and willing to pay. The demand determinants are based on the projection for future demand trends in one or more of the following three major factors:
Therefore, to further examine the effect of income effect, we set up interaction variables between income and other variables. After t-statistic test, our group found three statistically significant variables. We adjust the model
Your paper should be between 1750 and 2500 words, in APA format and structured as follows:
The current economy has hurt many retail businesses. Every month another retail giant closes its doors. Retail stores which we never would have imagined have gone bankrupt. Retail sales have declined greatly. Major cause of this declination is because many people are unemployed and cannot afford to purchase anything. Retailers are forced to discount prices to increase sales, but discounting still hurts margins. Retailers are assuming a very
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