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Giffen Goods in a Transition Economy: Subsistence Consumption in Russia

Yochanan Shachmurove ()

Frontiers in Finance and Economics, 2011, vol. 8, issue 2, 27-48

Abstract: In the last decade, events outside the realm of Western economics have been viewed as “paradoxes.” We focus on the Giffen paradox, and argue that Giffenity is consistent with a generalized law of demand. We confirm the occurrence of Giffenity in Russia during the early 1990s. During this period, people reduced consumption of less affordable meat and fish despite a decline in their relative prices, while augmenting their consumption of more affordable potatoes and bread, a significant increase in relative prices of the latter goods notwithstanding. We conclude that incorporating Giffenity into current economic theory will make it more robust.

Keywords: Giffen goods; inferior goods; subsistence; Russia; household consumption; post-soviet transition (search for similar items in EconPapers)
JEL-codes: D1 E2 (search for similar items in EconPapers)
Date: 2011
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