Investigation of relationship between income inequality and per capita private consumption in OIC countries using DOLS approach

Investigation the impact of income inequality on consumption and saving of private sector is one of the important issues in the economic growth literature and consumption theories and many empirical studies have been allocated to these fields. For this purpose، the main objective of this paper was to estimate long-run relationship between income inequality and per capita private consumption in 57 OIC countries over the period of 1980-2009. To achieve this objective، the econometric model has been estimated by using of dynamic ordinary least square (DOLS) approach. The results of this study showed that there was a co-integrating vector between income inequality and private consumption. In addition، the real interest rate and income inequality have negative and per capita income has positive and significant effect on private consumption respectively. Hence، the main policy implication of this study is that، policy makers in these countries should adopt re−distribution policies in order to increase the private consumption and domestic products