THE CONSUMPTION-INVESTMENT-UNEMPLOYMENT RELATIONSHIP IN SPAIN: AN ANALYSIS WITH REGIONAL DATA

  • Roberto BANDE Group of Analysis and Modelling in Economics University of Santiago de Compostela, Spain
  • Dolores RIVEIRO Group of Analysis and Modelling in Economics University of Santiago de Compostela, Spain

Abstract

In this paper we analyze the consequences of changes in the consumption patterns on unemployment through an intermediate channel via investment. Specifically, after presenting our theoretical framework, we build a dynamic econometric multi-equational model, in which we estimate a consumption function, an investment function and an unemployment rate equation, using a panel of 17 Spanish regions. This model is characterized by its dynamics and the cross equation relationships. After estimating the model, we run a number of dynamic simulations in order to verify our starting hypothesis, namely that temporary and persistent shocks to consumption have long lasting effects on unemployment, both directly and indirectly, through investment. Our results are especially relevant in the current recessive context of the Spanish economy, which is characterized by severe falls in consumption and unprecedented increases in unemployment.

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Published
2013-06-30
How to Cite
BANDE, Roberto; RIVEIRO, Dolores. THE CONSUMPTION-INVESTMENT-UNEMPLOYMENT RELATIONSHIP IN SPAIN: AN ANALYSIS WITH REGIONAL DATA. Theoretical and Practical Research in Economic Fields, [S.l.], v. 4, n. 1, p. 5-24, june 2013. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/1174>. Date accessed: 29 mar. 2024.