The Impact of Inflation and GDP on Aggregate Consumption in Uzbekistan

Kakhkhorov Jurat Sulton Ugli, Ikaputera Waspada, Karimov Ma’murbek Utkir Ugli

Abstract


Introduction/Main Objectives:This study examines the relationship between inflation, gross domestic product (GDP) and aggregate consumption in Uzbekistan over the period 2000–2023. Background Problems: The study contributes to the understanding of macroeconomic stability in transition economies and offers policy recommendations for sustainable consumption growth. Research Methods: Using a time-series econometric framework, the paper analyses how price stability and economic growth influence household consumption behaviour. Augmented Dickey–Fuller tests indicate that consumption and GDP are integrated of order one while inflation is stationary at level, and the Johansen procedure confirms a long-run equilibrium relationship among the three variables. Finding/Results: The estimated autoregressive distributed lag model shows that GDP has a positive and statistically significant effect on aggregate consumption, with an elasticity of 0.78, whereas inflation exerts a negative and significant effect with an elasticity of −0.15. The findings suggest that economic growth raises consumption through income expansion, while inflation offsets part of these gains by eroding purchasing power. Conclusion:The model explains approximately 85 per cent of the variation in aggregate consumption and passes standard diagnostic and stability tests

Keywords


Inflation; Gross Domestic Product; Aggregate Consumption; Macroeconomic Stability;

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DOI: https://doi.org/10.17509/msb.v8i1.105189

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