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The Persistence Of Macroeconomic Shock Effects on Russian Household Consumption

This study examines the impact of macroeconomic crises on household consumption in Russia, focusing on food items, non-food items, and durable goods. Using data from the Russia Longitudinal Monitoring Survey (RLMS), panel regressions are run to analyze the persistence and magnitude of these effects. The findings contribute to the understanding of consumption patterns in transition economies and the amplification of shocks.

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The Persistence Of Macroeconomic Shock Effects on Russian Household Consumption

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  1. The Persistence Of Macroeconomic Shock Effects on Russian Household Consumption Yana Yushkina

  2. Question • How do macroeconomic crises affect household consumption of food items, non-food items, and durables in Russia? • Magnitude • Persistence

  3. Motivation • Example of 2007-2009 crisis • Important to know how consumption is affected • Permanent or temporary effect? • Amplification of effect in transition economies

  4. Russia’s GDP

  5. Household Consumption in Russia

  6. Recent trends

  7. Theory • Modigliani and Brumberg (1954) • Intertemporal utility maximization • Friedman (1957)

  8. Consumption Smoothing Literature • Common approaches • Empirical estimation • Instrumenting for permanent income • Response to predictable changes in income • Another approach • Unpredictable exogenous shock effects • Stillman (2003), Skoufias (2003) • My contribution

  9. Data • Russia Longitudinal Monitoring Survey (RLMS) • Contains information about household- level expenditures, income, and demographic characteristics • Covers1992-2007

  10. Methodology • Run panel regressions on different types (f,nf,d) of consumption as well as aggregate consumption • Expect durables to be more affected lnCh,t= β1 lnCh,t-1 + β2 lnYh,t + β3 lnYh,t-1 + β4 MacroVart + β5 Household Characteristicsht + β6Crisist * lnYh,t + β7Crisist-1 * lnYh,t + β8 Householdh + β9 Yeart +εh,t

  11. Issues • Dynamic panel bias

  12. Special thanks to Prof. Alpanda and Prof. Barbezat!

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