Measuring the Relationship between Consumption and National Income in the Iraqi Economy for the Period 1986-2018

Abstract

The research consists of two theoretical and practical sides. In the theoretical side, the research deals with the hypotheses and objectives of the research and testing the stability of time series for both national income and consumer spending in Iraq for the period (1986-2018) and the extent of their application of the common complementarity model. As for the research problem, it is represented in how to test the stability of the time series that make up the consumption function in Iraq and how to overcome the false regression characteristic of the estimated model. Determine the variables affecting the model, which are the dependent variable (consumption and self-consumption) And some important notes about them, how to estimate them and their characteristics, in addition to the concept of joint integration and its mathematical equations. On the application side of the mathematical statistical models on the data of the time series of income and expenditures for the period (1986-2018), the research reaches a set of conclusions, the most important of which is that the national income explains about (89.6%) of the current changes and the percentage of the remaining spending is 10%. To the unexplained external factors that are present within the random error component. Finally, there are some recommendations, the most important of which is the necessity to test the degree of completeness of time series before making any estimation, in instruction to evade falling into the problematic of false reversion. Key words in research / co-integration, the self-relevance function, the EngelGranger method.