Islam, M. S., & Ahammad, D. M. (2017). Investigating The Relationship Between Gross Domestic Product (GDP) and Household Consumption Expenditure (HCE) In Two SAARC Countries: Nepal and Pakistan.

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Investigating The Relationship Between Gross Domestic Product (GDP) and Household Consumption Expenditure (HCE) In Two SAARC Countries: Nepal and Pakistan

Md. Saiful Islam & Dr. Shaikh Mostak Ahammad

Abstract   This study examines the matter of trends (level and slope), cycle and irregular components in the Gross Domestic Product (GDP) and Household Consumption Expenditure (HCE) of two SAARC (South Asian Association for Regional Cooperation) countries: Nepal and Pakistan. SAARC countries produce GDP (PPP) US$ 9.9 trillion and GDP (Nominal) US$ 2.9 trillion and constitute 9.12% of global economy as of 2015. The mentioned two countries from this region are selected due to their importance in the SAARC region and their challenges during last few decades i.e. Political crisis and natural disasters. In this study the multivariate unobserved components model is used to decompose the GDP and HCE and examine the relationships between these two variables of Nepal and Pakistan. The time period of this study is 1970-2014 and Kushnirs statistical data is employed. The maximum likelihood smoother is employed in the trend plus stochastic cycle methodology of Koopman et al. (2009) to estimate the model. It is found here that there have no deficiencies in the diagnostics of normality, auxiliary, prediction, and forecast. And residual diagnostics also present that it is nicely fitted with this model. Empirical results clearly show that there have strong correlations between the GDP and HCE in irregular components in both the countries of Nepal and Pakistan. Finally, in both slope and cycle, the correlations between GDP and HCE of Nepal and Pakistan are found perfectly positive in the short and long run.

Keywords: GDP, Household Consumption Expenditure, UC Model, SAARC, Economy

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Title:                                  Investigating The Relationship Between Gross Domestic Product (GDP) and Household Consumption Expenditure (HCE) In Two SAARC Countries: Nepal and Pakistan

Authors:                          Islam, M. S., & Ahammad, D. M.

Journal Name:             International Journal of Science and Business

Website:                         http://ijsab.com

DOI:                                 10.5281/zenodo.439694

ISSN:                               ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)

Media:                              Online and Print

Volume:                           1

Issue:                               2

Acceptance Date:       23/03/2017

Date of Publication: 24/03/2017

PDF URL:                      http://ijsab.com/wp-content/uploads/101.pdf

Free download:         Available

Page:                               1-36

First Page:                    1

Last Page:                     36

Citation:  Islam, M. S., & Ahammad, D. M. (2017). Investigating The Relationship Between Gross Domestic Product (GDP) and Household Consumption Expenditure (HCE) In Two SAARC Countries: Nepal and Pakistan. International Journal of Science and Business, 1(2), 1-36. doi:10.5281/zenodo.439694

Retrieved from http://ijsab.com/wp-content/uploads/101.pdf

About Authors:

Md. Saiful Islam

MBA, Department of Accounting

Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh.

Dr. Shaikh Mostak Ahammad

Associate Professor, Department of Accounting

Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh.

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