Explore BrainMass
Share

Explore BrainMass

    average propensity of consumption, average propensity of investing out of income and the average propensity of imports out of income

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Calculating the average propensity of consumption, average propensity of investing out of income and the average propensity of imports out of income.
    for three different European countries for three consecutive years and comment about possible time changes and eventual differences across countries.

    How do to that in one page?

    Data can be found:
    IMF
    OECD (Economic outlook)
    Eurostat.

    © BrainMass Inc. brainmass.com October 9, 2019, 5:39 pm ad1c9bdddf
    https://brainmass.com/economics/international-investment/average-propensity-consumption-investing-imports-63788

    Solution Preview

    I have collected the data you need to do this exercise from the International Financial Statistics (IFS) service, from the IMF. The raw data is attached in the file called data.xls.

    I've chosen Spain, Germany and the UK as the three european countries. The formulae for the three indicators you need are:

    Avg propensity to consume = (Consumption)/(Disposable Income)

    Avg propensity to invest = (Investment)/(Disposable Income)

    Avg propensity to import = (Imports)/(Disposable Income)

    The IFS series for consumption is called "Household consumption", the one for investment is "Gross Fixed Capital Formation", and the imports come from the "Imports of goods and services" series. I've also included the population series in the excel file, just in case we need to do some analysis.

    Here are the results of these indicators for the years 2002/2003/2004

    Spain
    2002 ...

    Solution Summary

    Calculating the average propensity of consumption, average propensity of investing out of income and the average propensity of imports out of income is achieved.

    $2.19