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Social Spending and Household Welfare: Evidence from Azerbaijan

Ramiz Rahmanov

No 02-2014, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: We measure the response of household consumption of different income groups to social spending during the 2002-2012 period using the aggregated Household Budget Survey Data. We find that households respond more strongly to changes in pensions than to changes in allowances and in-kind transfers. The very weak response of households to changes in allowances and in-kind transfers, both of which are transitory income, is consistent with the permanent income hypothesis. The estimates of pension elasticities suggest that the response of the low income group to changes in pensions is the strongest, whereas the response of the middle income group is the weakest. We further find that, in aggregate, households of all income groups do not exhibit habit persistence.

Keywords: social spending; consumption; permanent income hypothesis; welfare; Azerbaijan (search for similar items in EconPapers)
JEL-codes: E21 E61 H24 H55 I31 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2014-02-11
New Economics Papers: this item is included in nep-mac, nep-sog and nep-tra
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