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Evaluation of permanent and transitory shocks role in consumption and income dynamics in the Russian Federation

Pavel Koval () and Andrey Polbin
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Pavel Koval: Gaidar Institute, Moscow, Russian Federation

Applied Econometrics, 2020, vol. 57, 6-29

Abstract: In this paper we estimated the parameters of household consumption sensitivity to permanent and transitory income shocks, as well as the evolution of the shocks’ variance over time, using RLMS micro-data. Estimations were conducted for various types of income and consumption, as well as social groups. Large families, which are consist of more than five members, have a reduced sensitivity to permanent shock and an increased sensitivity to transitory one, comparing to small families. Households with a head over 60 show increased sensitivity to permanent income shocks. The reaction of urban population consumption is less for transitory shocks and greater for permanent one. Households with a high-educated head are less sensitive to permanent income shocks compared to those with a non-educated head.

Keywords: permanent shocks; transitory shocks; volatility; consumption; income; RLMS. (search for similar items in EconPapers)
JEL-codes: D10 E20 (search for similar items in EconPapers)
Date: 2020
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