I have found in the short run a positive relationship between household consumption and GDP per capita growth rate but in the long run, it is negative. Any suggestions on this issue?
Also, I have read this article https://www.weforum.org/agenda/2015/10/how-household-debt-affects-economic-growth/
What is your idea?
First, one should have in mind that if you're using VECM or ARDL model the interpretation of the coefficients is with opposite sign of the ones you have as a result, cause you're using vectors. Second, the direction of the linkage is also important. If your dependent variable is GDP per cap. and the consumption is highly dependent of import, the rise in the consumption will lead to a strong increase in the latter. If your dependent is consumption, there is not much logic to be negative. Except, if the country's GDP growth is becoming more dependent of exports and investments.
Thank you Nikolay for your response !!! My dependent variable is Consumption.
It is VECM that you interpret coefficient in opposite but not ARDL as far as I know
In order to have long term relationship the data have to be cointegrated, which requires adding an error correction term. Accordingly, the interpretation of coefficients should be in opposite.
Dear Nikolay can you give a reference, please, about ARDL long-run coefficients should be negative
Check for example Asterou, D., Hall, S., Applied Econometrics: A Modern Approach Using Eviews and Microfit Revised Ed.
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