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Predicting Changes in Household Consumption Using Neural Networks
[Прогнозирование Изменений Потребления Домашних Хозяйств С Использованием Нейронных Сетей]

Author

Listed:
  • Anastasia D. Petaykina

    (Russian Presidential Academy of National Economy and Public Administration)

Abstract

The article is devoted to research of influence of income changes on consumption of the households in Russia – in particular, the task is to develop and train a neural network capable of forecasting changes in consumption based on data on income changes, individual characteristics of households, as well as the factor of the existence of liquidity constraints. The relevance of the use of a neural network is explained by the assumption of a non-linear relationship between consumption and factors that can explain its change. The study is conducted using data broken down by individual households available in the RLMS HSE database for the period from 2006 to 2019. According to the results of the study, it was found that the use of neural networks improves the predictive properties of the model compared to the use of linear regression, which is evidence in favor of the existence of non-linear relationships between the indicators. The article was prepared within the framework of the research work of the state assignment of RANEPA.

Suggested Citation

  • Anastasia D. Petaykina, 2023. "Predicting Changes in Household Consumption Using Neural Networks [Прогнозирование Изменений Потребления Домашних Хозяйств С Использованием Нейронных Сетей]," Russian Economic Development, Gaidar Institute for Economic Policy, issue 7, pages 42-53, July.
    • Handle: RePEc:gai:recdev:r2358
    as

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    References listed on IDEAS

    as
    1. Marjorie A. Flavin, 1984. "Excess Sensitivity of Consumption to Current Income: Liquidity Constraints or Myopia?," NBER Working Papers 1341, National Bureau of Economic Research, Inc.
    2. Michener, Ron, 1984. "Permanent income in general equilibrium," Journal of Monetary Economics, Elsevier, vol. 13(3), pages 297-305, May.
    3. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    households’ consumption; neural networks; multilayer perceptron; RLMS;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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