Empirical Measure of Wealth Effects in Household Consumption: The Case of Congo

Abstract

The purpose of this article is to determine the impact of wealth in household consumption, by focusing on wealth under monetary form. In this way, the correction error model ARDL type is used. The outcome estimations show a significant existence of wealth effect on a period 1991.Q1-2016.Q1. In this way, the marginal propensity to consume wealth equals 0,476 to a short term. However, this marginal propensity to consume wealth, though being significant and positive is down to the marginal propensities to consume income available in the long term that are up to 0,695 and 0,777 as regard the short and long term. Nevertheless, to improve the households’ consumption level, the Congolese government can boost the monetary wealth by decreasing prices. More specifically, the government needs to lower value added tax (VAT).