A dynamic consumption function for Trinidad and Tobago

Author(s): Craigwell, Roland C; Rock, Llewyn L (1993)

Created 22 Jul, 1993
Categories Working Papers
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This paper employs a flexible, dynamic formulation to derive a candidate consumption for the small open economy of Trinidad and Tobago. Cointegration tests are used to determine the variables in a Binder-Deaton Euler Equation-Error Correction model. Vector Autoregressions are then used to decompose variables into expected and surprise components and data evidence. Results show that this decomposition is formative and that the Binder-Deaton model, when formulated to include non-traditional regressors such as government spending and fiscal deficits, provides a good fit of the Trinidad and Tobago data.

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