International Journal of Research in Social Sciences
Vol. 9 Issue 4, April 2019,
ISSN: 2249-2496 Impact Factor: 7.081
Journal Homepage: http://www.ijmra.us , Email: editorijmie@gmail.com
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International Journal of Research in Social Sciences
http://www.ijmra.us , Email: editorijmie@gmail.com
The Determinants of Aggregate Consumption
Expenditure: Empirical Evidence from Nigeria
Felix O. Ashakah
*
Abstract
This study investigated the determinants of aggregate consumption expenditure in Nigeria. The
model employed was derived from the Keynesian consumption function where consumption is
explained by variations in income; C= f(Y). The study covered the period of 1981 – 2015. The
study estimated an error correction model (ECM) using ordinary least squares estimation
technique. The study showed that income (proxy by gross domestic product) has a positive
significant impact on aggregate consumption expenditure in Nigeria. It was recommended that
employers of labour should endeavor to increase the workers’ salaries periodically in line with
the changes in the country’s macroeconomic and microeconomic variables. It is only when
salaries are increased in line with the prevailing economic situations in the country that
consumers can improve on their consumption expenditure through increase in their disposable
income. Policies which reduce tax should also be formulated to enhance consumers’ disposable
income. The Nigerian government should make amiable efforts to provide infrastructures,
security and enabling environment for business to strive as good performance of business in the
country will improve the returns on investment and finally impact positively on aggregate
consumption expenditure.
*
Department of Economics,Western Delta University, Oghara, Delta State, Nigeria