| Abstract: | Abstract
Consumption, referring to Household Consumption, is considered to be an important determinant of a country’s economic growth. In most countries it represents about 60% of the Gross Domestic Product. The aim of this study is to analyze Household consumption as a whole and its impact on the economic growth. It is common practice to do analysis on the general level of the growth of the economy, or the state of the transition economies (TEs), or analyzing enterprises, and many other different kinds of economic analysis, specific consumption such as energy consumption, but analysis of Household consumption as a whole and its impact on the nation’s economic growth has not been done yet. This study is focused on comparative analyses between North Macedonian and the South East European Countries such as, Slovenian, Albania, Bulgaria, Croatia, Greece, Romania, and Serbia, on household consumption and their impact on economic growth, which are particularly relevant for North Macedonia. To collect the data for the study more methods have been used. For conducting the analysis of North Macedonian Household Consumption, which is primary data, a questionnaire-based data, is used for analyzing the factors affecting Household Consumption. Considering the comparative analysis, we will make use of the secondary data from the state statistical office of North Macedonia as well and from National Bank of North Macedonia and World Bank indicators. For the SEE Countries we will make use of secondary data from State statistical office and World Bank in order to run macro analysis on household consumption effect on GDP. With primary we aim at applying: (i) ordinary least square (ii) instrumental variable technique two stage least square, (iii) unit root test (iv) vector auto regression and (v) Granger causality test. The findings of the study indicate that North Macedonia has maintained stability in the economy, and the economy has shown a slight economic growth at an average of 3 percent, unemployment has been on the decline, wages have increased at a steady pace, although they are still the lowest in the region. According to regression analysis run from the survey data, 1 percent increase in income increases household consumption by 0.45 percent. As for the household consumption impact on GDP, also according to regression analysis one percent increase in household consumption increase GDP by 0.66 percent. Running VAR and Granger causality test showed that Household Consumption did not Granger cause GDP growth. As for the SEE Countries, according to regression analysis we came to see that Bulgaria had the same regression structure as North Macedonia, where a 1% increase in household consumption will increase GDP by 0.45 percent, Albania a close by with a 1% increase in household consumption increasing GDP by 0.51%, the others had all a much higher effect in regards to Household consumption to GDP. |
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