The asymmetric behavior of household consumption under the business cycle |
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| Institution: | 1. Department of Public Finance, National Chengchi University, No. 64, Sec. 2, Zhi-nan Rd, Wenshan, 11605 Taipei, Taiwan;2. Department of Business Administration, Chung Yuan Christian University, No. 200, Chung-pei Rd, Chung-li, 32023 Taoyuan, Taiwan;3. Department of Accountancy, City University of Hong Kong, 88 Tat Chee Avenue, Kowloon Tong, Hong Kong;1. School of Economics and Management, Key Laboratory of Financial Science and Technology Innovation, Fuzhou University, 2 Xue Yuan Road, University Town, Fuzhou, Fujian, PR China;2. School of Economics and Management, Fuzhou University, 2 Xue Yuan Road, University Town, Fuzhou, Fujian, PR China;1. ISCAL – Lisbon Accounting and Business School, Instituto Politécnico de Lisboa, Av. Miguel Bombarda, 20, 1069-035 Lisbon, Portugal;2. SOCIUS – Research Centre in Economic and Organizational Sociology, CSG – Research in Social Sciences and Management, Rua Miguel Lupi, 20, 1249-078 Lisbon, Portugal;3. ISEG – Lisbon School of Economics and Management, Universidade de Lisboa, Portugal;4. UECE – Research Unit on Complexity and Economics, Rua Miguel Lupi, 20, 1249-078 Lisbon, Portugal;1. Department of Finance, School of Economics and Finance, Universidad EAFIT, Carrera 49 No. 7 Sur-50, Medellin, Colombia;2. School of Management, Universidad de los Andes, Calle 21, No. 1-20, Bogota, Colombia;3. Department of Economics and IME, University of Salamanca, Campus Miguel de Unamuno, 37007 Salamanca, Spain |
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| Abstract: | In this study, we examine whether and to what extent the pattern of household consumption is asymmetrically sensitive to economic changes. We use a threshold model with error correction to characterize household consumption under the business cycle. Using data from the 1979–2014 Survey of Family Income and Expenditure in Taiwan, we find that household consumption has pro-cyclical characteristics during the business cycle. More importantly, household consumption responds asymmetrically to economic fluctuations such that changes in consumption tend to be larger during expansions than during downturns. Furthermore, the nature of this asymmetry differs across household income quantiles. |
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| Keywords: | Cyclicality Asymmetry Business cycle Household consumption E32 D10 |
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