Determinants of Consumption Dynamics in Kagera Region in Tanzania, 1991–2010

Abstract

This paper examines the dynamics of consumption in Kagera Region during 19912010 period using the Kagera Health and Demographic Survey panel data. It examines the dynamics of household’s consumption by employing the fixed effects model and dynamic panel data estimators. The dynamic panel data estimators show that the Life Cycle Hypothesis for consumption smoothing does not hold. Additionally, the results for rural Kagera households and for the whole region show that households recover from shocks, which implies that the consumption path is stable. Thus, propoor farming approaches and earmarking resources for consumption stabilization interventions are needed.