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

  • Roberto BANDE University of Santiago de Compostela
  • Dolores RIVEIRO University of Santiago de Compostela

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.

Author Biographies

Roberto BANDE, University of Santiago de Compostela
Group of Analysis and Modeling in Economics
Dolores RIVEIRO, University of Santiago de Compostela
Group of Analysis and Modeling in Economics

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Published
2016-10-20
How to Cite
BANDE, Roberto; RIVEIRO, Dolores. THE CONSUMPTION-INVESTMENT-UNEMPLOYMENT RELATIONSHIP IN SPAIN: AN ANALYSIS WITH REGIONAL DATA. Theoretical and Practical Research in the Economic Fields, [S.l.], v. 4, n. 1, p. 5-24, oct. 2016. ISSN 2068-7710. Available at: <https://journals.aserspublishing.eu/tpref/article/view/288>. Date accessed: 23 jan. 2022.
Section
Theoretical and Practical Research in the Economic Fields

Keywords

consumption, investment, unemployment, panel data