Abstract:
Consumption expenditure is one and major component of Gross Domestic Product in
Expenditure approach. Even though it is macro variable, it is better to analyze the variable at
household level. Therefore, the general objective of this study is to analyze determinants of
household consumption expenditure in Gudar town of Toke Kutaye woreda. Specific objectives
are to see the trend of consumption expenditure in the study area and to assess the basic factors
affecting consumption expenditure.
Most studies have been conducted on consumption expenditure considering it at macro level
variable and by time series data analysis. Very limited were conducted on household level and
hence, the research is intended to fill this gap by using cross sectional data at household level.
Mixed research design was employed to reach on final result by using both primary and
secondary data type. Primary data was gathered by using structured questionnaire which was
translated to Afan Oromo. Gathered data was analyzed by using both descriptive and
Econometric models especially multiple linear regression model followed by several tests for
assumptions of classical linear regression.
The result of the study shows that Among independent variables, age of household, gender of
household, education level of household and access to credit are statistically significant at 5%
and affecting households’ consumption expenditure negatively. Family size and occupation are
also statistically significant at 5% but positively affecting our dependent variable. Income and
housing condition are highly statistically significant at 1% and affecting households’
consumption expenditure positively. Finally Recommendations are forwarded based on result of
the study. These recommendations include having appropriate credit policy, income generating
policy, Education policy and family planning to short
