An analysis of alternate consumption hypotheses in South Africa.

Abstract

The first half of this research is an attempt to provide a solid theoretical foundation of the various theories of the consumption function and the empirical evidence. Both the theoretical foundation and the empirical evidence is wide-ranging, spanning a period of over fifty years, with a discussion on the early Keynesian consumption function through to the influence of the rational expectations approach to economic modelling. The emphasis is both on the macro as well as micro aspects of the consumption function.

The second half of this research considers the nature of the consumption function in South Africa. This is done with the application of time-series data to three particular models that could provide some insight, and answer certain broad questions about the behaviour of consumption in South Africa. More specifically this is achieved through disaggregation by considering demand functions for specific items of consumption.