📄 Abstract
This study investigated the macroeconomic and demographic determinants of aggregate consumption expenditure in Uganda for the period 1990–2024 using the Autoregressive Distributed Lag (ARDL) bounds testing approach. Guided by the Absolute Income, Permanent Income, and Life-Cycle hypotheses, the research utilized annual secondary data from the World Development Indicators database. The bounds test confirmed a highly significant long-run cointegrating relationship among the variables (F-statistic = 29.989). The error-correction speed of adjustment coefficient was negative and highly significant (−1.4049, p = 0.000), indicating an exceptionally rapid, oscillatory dampening adjustment process back to the equilibrium path. In the long run, GDP per capita exerted a dominant, positive, and highly significant influence on consumer spending (elasticity = 1.6032, p = 0.000), strongly validating the Absolute Income Hypothesis. Conversely, commercial lending interest rates maintained a rigid contractionary impact across both horizons (−0.0200, p = 0.000), acting as a severe credit squeeze on private spending. Personal remittances received demonstrated a significant negative parameter in the long run (−0.0077, p = 0.066), indicating a structural shift away from current outlays and toward long-term asset accumulation, while its positive short-run lagged innovation (0.0193, p = 0.000) confirmed a vital immediate consumption-smoothing safety net. Inflation exhibited a dual-horizon distortion, where immediate price spikes compressed real purchasing power in the short run (−0.0129, p = 0.001), but sustained long-term inflation forced nominal outlays upward (0.0094, p = 0.000). Finally, population growth displayed an initial short-run drag due to the heavy youth dependency burden described by the Life-Cycle Hypothesis, but matured into a massive long-run catalyst for expansion (0.1448, p = 0.000). Based on these findings, it is recommended that the Bank of Uganda implement target-capped interest spreads, while the Ministry of Finance should design micro-insurance programs and structure tax-exempt diaspora bonds to align with national development planning frameworks.
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📚 How to Cite:
Asingwire Clovis, Byanyima Faustino, Dr. Kagarura Rwamparangi Willy , MACROECONOMIC AND DEMOGRAPHIC DETERMINANTS OF AGGREGATE CONSUMPTION EXPENDITURE IN UGANDA , Volume 13 , Issue 9, September 2026, EPRA International Journal of Economics, Business and Management Studies (EBMS) , Pages: 250 - 257 ,