ABSTRACT
The study examines the relationship between private consumption expenditure and lending rate
in Namibia, with the aim of highlighting the effect of lending rate as an important factor that
determine the private consumption expenditure growth. The study is based on annual data
covering the period from 1980 to 2011. The Unrestricted Vector Auto – regression Model
(VECM) procedure was adopted. Two proxies for real wealth and real disposable income are
used in the study. The results show that real private consumption expenditure in Namibia adjusts
fast to changes in nominal lending rate, real wealth and real disposable income and that the
effects wear off in the long run. The results also reveals that the real private consumption
expenditure in Namibia is significantly explained by the changes in lending rate, income and
wealth and the effects confirms with the theories of consumption. Real wealth and real
disposable income have a positive impact on real private consumption expenditure, while
nominal lending rate has a negative impact. The negative impact realized from the findings
shows that in Namibia, the relationship between private consumption expenditure and lending
rate depends on the magnitude of the substitution effect. A fall in lending rate by the commercial
banks will be an appropriate instrument for stimulating the levels of private consumption
expenditure in Namibia. With income and wealth playing a vital role in influencing consumption
levels of households, fiscal policies, through its impact on disposable income and wealth, should
be considered as effective tools in promoting private consumption expenditure.
KALUMBU, S (2021). An Investigation Of The Relationship Between Private Consumption Expenditure And Lending Rate In Namibia. Afribary. Retrieved from https://afribary.com/works/an-investigation-of-the-relationship-between-private-consumption-expenditure-and-lending-rate-in-namibia
KALUMBU, SAKARIA "An Investigation Of The Relationship Between Private Consumption Expenditure And Lending Rate In Namibia" Afribary. Afribary, 28 Apr. 2021, https://afribary.com/works/an-investigation-of-the-relationship-between-private-consumption-expenditure-and-lending-rate-in-namibia. Accessed 24 Nov. 2024.
KALUMBU, SAKARIA . "An Investigation Of The Relationship Between Private Consumption Expenditure And Lending Rate In Namibia". Afribary, Afribary, 28 Apr. 2021. Web. 24 Nov. 2024. < https://afribary.com/works/an-investigation-of-the-relationship-between-private-consumption-expenditure-and-lending-rate-in-namibia >.
KALUMBU, SAKARIA . "An Investigation Of The Relationship Between Private Consumption Expenditure And Lending Rate In Namibia" Afribary (2021). Accessed November 24, 2024. https://afribary.com/works/an-investigation-of-the-relationship-between-private-consumption-expenditure-and-lending-rate-in-namibia