An analysis of the relationship between household incomes and expenditure in Zimbabwe from 1990 t0 2011
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This research examines the general relationship between household incomes and expenditures in Zimbabwe from 1990 to 2011. Many wonder if the hypothesis by the famous economist, Keynes, who hypothesized that consumers do not consume as much as they earn, if this is the scenario in Zimbabwe? Then the question to be asked is that, “Do consumers in Zimbabwe really have something to save?” or it is what Campbell termed as the “rule of thump”, whereby consumers’ income is equal to their consumption? This particular study will attempt to answer these questions as well as to evaluate if these theorems may be applicable in determining the relationship between consumers’ incomes and expenditure in the current Zimbabwean situation. The researcher utilized linear regression and model formulation methods in analyzing the data and found out that there is a strong positive relationship between the consumer income and expenditure in Zimbabwe. Despite the economic dilemma, the expenditure levels have been recording exceptional higher than income. In other words, Zimbabwean consumers consume more than they earn. This analysis indicates that the Keynes theorem adheres to the Zimbabwean.