Annual consumption functions - a Scottish-UK comparison, 1971-1985

This paper investigates the performance of a number of recently proposed 'consumption functions' using annual Scottish and UK data for the period 1971 to 1985. Whilst the exercise is 'atheoretical' in the sense that no attempt is made to tie estimated models to specific theories, the influences considered do reflect an underlying conviction that a full understanding of consumption functions ultimately necessitates an integrated framework for modelling household behaviour. In this context a number of recent models may be treated as non-competing and separate investigation of non-durable and durable expenditures may be helpful in evaluating competing explanations of recent consumption behaviour. Data coherent models of non-durable expenditures are obtained, although such specifications proved elusive for durables. Overall, there was some supporting evidence for the intuitive systems-perspective which motivated the analysis.