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- Title
THE CONSUMPTION FUNCTION AT THE REGIONAL LEVEL: THE CASE OF HAWAII.
- Authors
Ghali, Moheb; Renaud, Bertrand
- Abstract
The development of income and expenditure accounts provides a sound foundation for econometric studies at the regional level. Over the last decade a substantial number of regional econometric models have been estimated from existing data which were not necessarily adequate for the purpose. These models were built on weak foundations, and even estimates of the gross product of the area studied were lacking. How much could be done if accounts were available was an unanswered question. The present analysis for the State of Hawaii underscores the value of regional accounts. On the basis of recently compiled accounts it investigates the properties of a regional consumption function. Two broad questions are explored. First, can the theories of the consumption function developed for a nation be successfully used at the regional level? Second, does the importance of explanatory variables change when one moves from the national aggregate to the regional components? It is worth investigating the existence of possible behavioral differences between national consumption and regional consumption because of the particular character of a state and the specific economic fluctuations it experiences as well as its social structure. After a discussion of the exact nature of the Income and Expenditure Accounts developed for Hawaii several possible forms for the Hawaii aggregate consumption function are investigated. These alternative forms are based on theoretical developments concerning the national aggregate consumption function. The behavior of the components of consumption are examined later because they do not react to economic fluctuations in a uniform manner.
- Subjects
HAWAII; UNITED States; INCOME; PUBLIC spending; CONSUMPTION (Economics); ECONOMIC history
- Publication
Annals of Regional Science, 1971, Vol 5, Issue 1, p50
- ISSN
0570-1864
- Publication type
Article
- DOI
10.1007/BF01288112