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Impact of Positive and Negative Income Shocks on Household Consumption
[Анализ Влияния Положительных И Отрицательных Шоков Дохода На Потребление Домашних Хозяйств]

Author

Listed:
  • Anastasia D. Petaykina

    (Russian Presidential Academy of National Economy and Public Administration)

Abstract

The paper analyzes the impact of positive and negative income shocks on household consumption as part of checking the reasons for non-fulfillment of classical consumption theories. The analysis is carried out using data for the period from 2006 to 2019 for individual Russian households available in the RLMS HSE. The regression of changes in consumption in response to positive and negative changes in income is estimated with the inclusion of the existence of liquidity constraints. The various specifications of the model argue in favor of the existence of liquidity constraints as the reason for the non-fulfillment of the permanent income hypothesis. The article was written on the basis of the RANEPA state assignment research programme.

Suggested Citation

  • Anastasia D. Petaykina, 2023. "Impact of Positive and Negative Income Shocks on Household Consumption [Анализ Влияния Положительных И Отрицательных Шоков Дохода На Потребление Домашних Хозяйств]," Russian Economic Development, Gaidar Institute for Economic Policy, issue 1, pages 39-46, January.
    • Handle: RePEc:gai:recdev:r2305
    as

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    References listed on IDEAS

    as
    1. Marjorie A. Flavin, 1984. "Excess Sensitivity of Consumption to Current Income: Liquidity Constraints or Myopia?," NBER Working Papers 1341, National Bureau of Economic Research, Inc.
    2. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    3. Michener, Ron, 1984. "Permanent income in general equilibrium," Journal of Monetary Economics, Elsevier, vol. 13(3), pages 297-305, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    household consumption; income shocks; liquidity constraints; myopia; RLMS;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • 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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