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Structural Changes of Household Expenditures in Bulgaria – Engel’s Law and Baumol’s “Cost Disease”

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  • Nikolay Peykov

Abstract

This study examines the change in the structure of household expenditures in the light of different income and price elasticity of demand for certain groups of goods and services. The laws of Engel and Baumol were largely followed, according to the former, as wealth is growing the structure of consumption changed, while the latter focus on productivity and relative prices. Econometric techniques have been implemented to correctly determine elasticity coefficients, as well as quantitative methods for expressing the contribution of rising income and prices to household expenditure. The results of the analysis show that income growth is a more significant factor for the change in household expenditure patterns in a developing country like Bulgaria. Considerations have also been made about the effectiveness of monetary policy on the consumption of different groups of goods and services.

Suggested Citation

  • Nikolay Peykov, 2021. "Structural Changes of Household Expenditures in Bulgaria – Engel’s Law and Baumol’s “Cost Disease”," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 134-155.
    • Handle: RePEc:bas:econst:y:2021:i:3:p:134-155
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    File URL: https://www.iki.bas.bg/Journals/EconomicStudies/2021/2021-3/8_Peykov.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mariella Nenova, 2022. "Households’ Consumption Pattern and Saving – Evidence for the First Year of the Covid-19 Pandemic in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 3-22.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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