What is Consumption Expenditure

Households' consumption expenditure becomes an important determinant of GDP of a country, particularly when the economy is struck by depression with low levels of private and public investments. So maintaining growth of this head of expenditure over time becomes the crucial agenda of the policy makers all over the world. The present chapter tries to analyze whether the developing countries' levels of households' consumption expenditure are converging to the ones in the developed countries during 1980-2013 in the sample of 40 countries. The study reveals that there is no significant absolute ß and s convergence among either in the cross section or in pooling of the data during the given period. But population growth factor is making the countries converge significantly in conditional sense. By separating the entire data we observe that, for the entire period, the developed countries are significantly converging in absolute sense while the developing countries are not, although there are mixed results in s convergence.