The Persistence Of The Persistence Of Macroeconomic Shock Macroeconomic Shock Effects on Russian Effects on Russian Household ConsumptionHousehold Consumption
Yana Yushkina
QuestionQuestionHow do macroeconomic crises
affect household consumption of food items, non-food items, and durables in Russia?
Magnitude Persistence
MotivationMotivation
• Example of 2007-2009 crisis• Important to know how consumption is affected• Permanent or temporary effect?• Amplification of effect in transition economies
Russia’s GDPRussia’s GDP
Household Consumption in Household Consumption in RussiaRussia
Recent trendsRecent trends
TheoryTheoryModigliani and Brumberg (1954)
◦Intertemporal utility maximization
Friedman (1957)
Consumption Smoothing Consumption Smoothing LiteratureLiteratureCommon approaches
◦Empirical estimation◦Instrumenting for permanent income◦Response to predictable changes in
incomeAnother approach
◦Unpredictable exogenous shock effects Stillman (2003), Skoufias (2003) My contribution
DataDataRussia Longitudinal Monitoring
Survey (RLMS) Contains information about
household- level expenditures, income, and demographic characteristics
Covers1992-2007
MethodologyMethodologyRun panel regressions on different types (f,nf,d)
of consumption as well as aggregate consumption
Expect durables to be more affected
ln Ch,t = β1 ln Ch,t-1 + β2 ln Yh,t + β3 ln Yh,t-1 + β4 MacroVart
+ β5 Household Characteristicsht
+ β6 Crisist * ln Yh,t
+ β7 Crisist-1 * ln Yh,t
+ β8 Householdh
+ β9 Yeart
+εh,t
IssuesIssuesDynamic panel bias
Special thanks to Special thanks to Prof. Alpanda and Prof. Prof. Alpanda and Prof.
Barbezat!Barbezat!