Research Discussion Paper – RDP 01 Equations for Personal Consumption Expenditure Introduction

The aim of this paper is to develop equations to explain quarterly movements in personal consumption expenditure disaggregated into three categories: motor vehicles; other durables (electrical goods and other household durables); and non-durables, an aggregate of the other ten categories of personal consumption expenditure in table 8 of the Quarterly Estimates of National Income and Expenditure,(4). Quarterly seasonally unadjusted deflated data for the period 1959(1) to 1967(4) are used in the regressions.

The theory underlying the equations is presented in section 2 and some statistical questions are discussed in section 3. Definitions of the variables and sources of the data are given in section 4. The estimates of equations for personal consumption expenditure on non-durables, motor vehicles and other durables appear in sections 5, 6 and 7 respectively. Some tentative conclusions are drawn in section 8.