An Econometric Analysis of the Integrative Relationship between Rice Consumption Expenditure and Macroeconomics Factors: Saudi Arabia

Abstract

Household consumption expenditure, of food and non-food items, is a component of macroeconomic factors in Saudi Arabia. The presence of the equilibrium relationship between the components of the macroeconomic factors is essential for economic growth. This research aimed to measure the extent to which the consumption expenditure of rice was affected by some of the macroeconomic factors, namely national income, per capita national income, and the consumer price index in Saudi Arabia from 1990 to 2018. This research relied on secondary data collected from various sources such as the Saudi Statistics Authority and the World Bank. Johanson’s cointegration test and Granger's causal test were used to achieve the specific goals (knowing the equilibrium relationship and the existence of causality between study variables). The results showed that there was a long-run relationship between the study variables. Also, the results reflected the existence of causality: It was found that the consumption spending on rice is affected by both the national income and the per capita national income separately. From these results, this study recommends that during papering socioeconomic planning, rice should be given more attention.