Daniel da Silva Barros

The main goal of this research is to analyze the behavior of the aggregate consumption of the Brazilian economy in the period from 1980 to 1999. This emphasized the measurement of the marginal propensity to consume of the Brazilians agents along the analyzed period. Moreover, the effects of the exogenous shocks on the consumption series received attention. Pursuing these objectives implied a review of the literature on the main theoretical contributions to the consumption function. Therefore, it stresses the consumption function from Keynes till recent analyses, including Fisher’s intertemporal decision behavior, the hypotheses of the life cycle and of the permanent income, the application of the rational expectations in the consumers' decision process of Hall. The empirical analysis estimated initially the consumption function with the ARCH methodology, using an equation that considers the income and lagged consumption in one period as independent variables. Then, the co-integration analysis of the no-stationary variables, consumption and income, obtained the results on the long run marginal propensity to consume. Hence, the results indicate that the long run marginal propensity to consume of income is approximately 94%. Getting these results, a VEC analysis showed that the 1980-82 recession and the increase of the degree of opening were important to error correction and the stabilization of long run relation among consumption, income e lagged consumption. Furthermore, the impact of economic shocks on the consumption series was achieved through the inclusion of dummy variables. In accordance with the results, the intensification of the commercial opening, starting from 1990, effected the aggregate consumption with a significant increase, reinforced by the positive effects of Real Stabilization Plan implemented in the Brazilian economy in 1994. Notwithstanding, other plans of stabilization just influenced temporarily aggregate consumption in Brazil.