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Estimation of the consumption function of Russian households using RLMS microdata

Author

Listed:
  • Pavel Koval

    (Gaidar Institute for Economic Policy)

  • Andrey Polbin

    (Gaidar Institute for Economic Policy)

Abstract

In this paper we consider a simple model of permanent income in which households consume a certain share of permanent income, the value of which is estimated using the adaptive expectations process based on the dynamics of actual income. The parameter of propensity to consume itself depends on the characteristics of a household, such as income decile, household size, number of children, level of education, etc. The model employs RLMS microdata using OLS and IV methods and provides interpretable estimates of propensity to consume. The results can be used for the purposes of formulating economic policy.

Suggested Citation

  • Pavel Koval & Andrey Polbin, 2020. "Estimation of the consumption function of Russian households using RLMS microdata," Economics Bulletin, AccessEcon, vol. 40(3), pages 2254-2261.
    • Handle: RePEc:ebl:ecbull:eb-20-00082
    as

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    References listed on IDEAS

    as
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    4. Flavin, Marjorie A, 1981. "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 974-1009, October.
    5. Ashraf, Quamrul & Gershman, Boris & Howitt, Peter, 2016. "How Inflation Affects Macroeconomic Performance: An Agent-Based Computational Investigation," Macroeconomic Dynamics, Cambridge University Press, vol. 20(2), pages 558-581, March.
    6. Dimitris Christelis & Dimitris Georgarakos & Tullio Jappelli & Luigi Pistaferri & Maarten van Rooij, 2019. "Wealth Shocks and MPC Heterogeneity," CSEF Working Papers 531, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • D1 - Microeconomics - - Household Behavior

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