Dynamic Relationship between Income and Consumption: A Time Series Analysis of Spain

This study examined the household and government consumption with income separately both in short and long run.The data is collected from the WDI from 1960 to 2010 of spain. Analysis is  done by using the co integration technique and error correction model. The results of the study demonstrate that household consumption is more than that of income in short run but in long run with the adjustment rate of 7% the consumption is less than income. In contrast ,the expenditures of government and consumption is more than that of its income in long run and vice versa. The reason for the more expenditures in long run is due to the debt financing. Keywords: Income, Consumption, Co integration, Error correction model, Spai

Size, P/E Ratio and Equity Stock Returns in Pakistan

This study examine the impact of size and price earning ratio on equity returns by using Fama and French (1992, 1993).Results demonstrate that market premium exist in Pakistani equity market and size factor found positive related to portfolio returns. Size premium does not explain the big portfolios returns. In the period of 2002 to 2011 and 2007 to 2011 HML better explains the low price earning stocks and price earning is a negative proxy for book to market. In addition this study also confirms that Fama and French three factor model is a better approach to explain the returns in Pakistani equity market. JEL Classification Number: G11, G12, C52 Keywords: CAPM, APT, Fama and French Three Factor, Equity Marke