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Changes in Household Consumption Expenditures in Response to Economic Shocks in Russia

Sat, August 12, 4:30 to 5:30pm, Palais des congrès de Montréal, Floor: Level 5, 520A


This paper examines the changes in the level and types of consumption expenditures and their associations with household per capita incomes during the four economic shocks that Russia has experienced since 1994. Data were collected from a nationally representative, annual survey of households (RLMS-HSE) between 1994 and 2014. Statistics of the Federal State Statistics Service is supplementary. Four hypotheses on composition of cutbacks, relationship between per capita income and consumption, levelling effect, pattern of consumer response to economic shocks are proposed. Data demonstrate that the levels of consumption expenditures in three main categories (food, non-food and services) decreased during four economic shocks and were significantly associated with per capita income fluctuations. Food expenditures suffered less from the income shocks than spending on non-food goods and services. The central argument of the paper is that the decline in middle- and high-income households’ expenditures during economic shocks is typically higher, implying that economic shocks produce a temporary leveling effect on the living standards of different income groups. Finally, a relatively stable pattern of consumer responses to economic shocks has been revealed, despite these shocks’ divergence; this pattern implies an overall economization and simplification of expenditures.


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