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Article Title:
An Estimation of the Consumption Function for Kenya Using Keynes' Absolute Income Hypothesis for the Period 1992-2011
by Alice C. Ofwona

Abstract:
This paper presents a consumption function for Kenya for the period 1992 to 2011, estimating total household consumption expenditure against total income. It is based on a study whose main objective was to investigate how consumption expenditure is determined by income according to Keynes? Absolute Income Hypothesis (AIH) for the case of Kenya. The model was tested by ordinary least squares over the period 1992 to 2011. The data was obtained from the World Bank database. The results showed that in Kenya, consumption is determined by income and the AIH was found to work well for the case of Kenya. The author recommends that the government should implement agricultural policies to improve the income base of most households and eradicate poverty and low incomes. The research is significant as it adds to the body of knowledge on the validity of the theories of consumption functions that have been propagated, especially by Keynes, for the case of a developing country like Kenya.

Keywords: consumption function, ordinary least squares, income, keynes, expenditure

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