Multiple Regressions Used in Analysis of Private Consumption and Public Final Consumption Evolution

Abstract

This paper approaches the evolution of the final consumption recorded at the level of the Romanian economy. The main variable of the analysis is the final consumption, which the authors assume to be influenced by the private consumption and the public consumption. The correlation between the main parameter and its influence factors is analyzed through a regression model, designed with the help of Eviews. The model is tested using standard methods and the results of the tests are also commented within the article. 1. Introduction The private consumption and the public consumption are two of the factors that contribute to the calculation and, thus, the evolution of the Gross Domestic Product. According to the statistical methodology, the public and private consumption are two of the components of the final consumption. The study of the correlation between the main indicator, that is the final consumption, and its two influence factors can be analyzed, simply, by using an approach based on the balance method of economic analysis. But, the econometric methods offer a more detailed set of results upon their proper application in such instance. The model we propose in this paper is designed according to the best practices in econometric applications and we have used the EViews software to estimate the parameters of the model. We have focused on multiple regressions, which estimate the combined action of the two factors, representing a source of information which offers further insight from the simple regressions that could be designed for each type of consumption.