Estimation of the consumption function of Russian households using RLMS microdata

Pavel Koval () and Andrey Polbin
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Pavel Koval: Gaidar Institute for Economic Policy

Economics Bulletin, 2020, vol. 40, issue 3, 2254-2261

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.

Keywords: Consumption; permanent income; RLMS household survey; adaptive expectation; Koyck transformation (search for similar items in EconPapers)
JEL-codes: D1 E2 (search for similar items in EconPapers)
Date: 2020-08-19
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