Asymmetric trajectories and shock persistence: A time series evaluation of consumption in the BRICS Plus countries

Abstract

Background: Analysing the persistence of consumption patterns is fundamental to identifying latent economic dynamics and the underlying factors of market fluctuations. In the BRICS Plus countries, this involves a complex interplay of socioeconomic, cultural and political conditions.
Aim: To study the degree of consumption persistence in 11 countries to determine whether shocks have transitory or permanent effects. Additionally, we examined how external shocks may have impacted spending patterns there.
Setting: The data used are ‘Final Consumption Expenditure of Households and NPISH’ from the World Bank and are annual (1960–2022).
Method: Fractional integration techniques. These econometric methods analyse time series with long-term memory, meaning that past events influence the future over an extended time horizon, although they fade over time.
Results: There are substantial differences. The most significant positive trends are in Brazil, Iran and Russia, as well as Ethiopia and Saudi Arabia. Only Iran and Saudi Arabia show evidence of mean reversion and temporary shocks. For the other countries, we cannot rule out the possibility that the shocks are permanent, as the unit root hypothesis is not rejected.
Conclusion: Each country exhibits distinct strengths and weaknesses. The methodology helps us analyse past consumption and its persistence to understand future consumption. Policy recommendations include fiscal stimulus, increased disposable income, investment in infrastructure, among others.
Contribution: No articles or books were found that analyse this topic with fragmented integration in Brazil, Russia, India and China (BRICS) Plus countries. Furthermore, the results are heterogeneous between countries, implying that the same policy recommendations cannot be generalised.