Research of dependence of net income on the consumption and taxation on example of BRICS countries (according to Klein model)

The Klein Model was created in 1940s by Lawrence Klein and was taken by economists as a coherent one, whch explains parameters estimation methods. The most obvious advantage of the given model is that it is the simpliest one to analyze some indicators.

The Klein model consist of a regression equation and also shows the consistence of.

Упрощенная версия модели Клейна

# Ct=aO+al*Yt+a2*Tt+Et

J Y=C+I

<  Це1)=0

I 0(£t)=C0nSt

Nowadays the most important indicator of every economy is GDP. Every country, every state is looking for a solution of the main aim – how to increase this indicator.

The most popular formula of GDP is Keynesian - C+I+G+NX, where C is consumption, I – investments, G – government spending and NX is net export. So, as it is seen, Consumption plays an important role in GDP construction and shows an ability of citizens to consume the aggregate supply of a country. For example, in case of Japanese economy, the country suffers from liquidity trap – people do not want to use money even if the interest rate is very low – and, in turn, don’t want to but, that leads to deflation and other struggles.

As for Taxation, this indicator is also play a leading role in economy. Taxation constructs government spending and there’s also need to sustain a balance – too low taxes lead to little government spending and GDP decreasing, while too high taxes lead to unwillingness to pay them.

The aim of this work is to estimate all parameters of the equation analyze their linear relationships, provide all test and make conclusions about forecast abilities of the model.

It is also needed to point out on the tests which will be used in the given work:

Correlation matrix is matrix which gives the correlation coefficient for each variable in the data set with each of the other variable in the set.

R ² – helps to calculate rate of explanatory ability between independent and dependent variables.

F – test is any statistical test in which the test statistic has an F -distribution under the null hypothesis.

T – test is any statistical hypothesis test in which the test statistic follows a Student’s t distribution if the null hypothesis is supported. It is most commonly applied when the test statistic would follow a normal distribution if the value of a scaling term in the test statistic were known.

Goldfield-Quandt test is a test for heteroscedasticity applicable when the observations can be ordered according to non-decreasing variance. Durbin–Watson statistic is a test statistic used to detect the presence of autocorrelation in the residuals from a regression analysis.

Let’s sum up the information. In this work we will consider how the Cosumption relates with such indicators as National Income and Taxation.

In the case of Brazil, In our case R2 is equal to 0,99. That means that 99% of variance of independent variable describes variance of dependent variable by this linear model. F is equal to 5,58 and F crit is 3,35. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 5,58 and F crit is 3,35. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. DW is not passed. According to T-test – not adequate.

Russia: F is equal to 5,58 and F crit is 3,35. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 13585 and F crit is 3,554. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 13585 and F crit is 3,554. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. DW is not passed. T-test is adequate.

India: F is equal to 13585 and F crit is 3,554. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 13585 and F crit is 3,354. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 13585 and F crit is 3,354. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. DW is passed. T-test is not adequate.

China: F is equal to 13585 and F crit is 3,354. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 13585 and F crit is 3,354. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. DW is not passed. T-test is not adequate.

South Africa: F is equal to 13585 and F crit is 3,354. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. F is equal to 13585 and F crit is 3,354. It means that F>Fcrit, and the R2 is not random in this equation and that quality of the specification of the model is high. DW is not passed. T-test is not adequate.