The Consumption-Investment-Unemployment Relationship in Spain: an Analysis with Regional Data

Roberto Bande and Dolores Riveiro

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we analyse 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 multiequational 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 characterised 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 characterised by severe falls in consumption and unprecedented increases in unemployment

Keywords: Consumption; investment; unemployment; panel data (search for similar items in EconPapers)
JEL-codes: E21 E22 E24 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-geo and nep-mac
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Related works:
Journal Article: THE CONSUMPTION-INVESTMENT-UNEMPLOYMENT RELATIONSHIP IN SPAIN: AN ANALYSIS WITH REGIONAL DATA (2013)
Working Paper: The Consumption-Investment-Unemployment Relationship in Spain: An Analysis with Regional Data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42681

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