Household Sector in the Czech Republic in Transition

Abstract

Marked changes have taken place in the volume and structure of incomes, expenditures and savings of the Czech household sector during the four year course of the economic transformation. The most significant influencing factor has been the process of inflation as a consequence of price liberalization and tax reform. Incomes declined significantly in real terms owing to this factor, but within a very short period this decline stopped. Real incomes have begun to grow since 1992. One significant feature of this period is the positive trend in savings. The savings rate grew in both the Czech crown and foreign currency deposits. The macroeconomic results of development in this field are positive. The household sector is a stable factor in the economic transformation. In individual households, the process of differentiation has taken place. Incomes and expenditures in families with children and pensioners' households dropped more than in other families. On the other hand, some groups of households grew rich. This process is observed in some households of employees, farmers and pensioners. Some discrepancies were found between the development of the macro values and household values. This means that there is a lack of statistical data regarding the incomes and expenditures of rich households which are not included in family accounts. The linear regression model was used to examine consumption patterns and elasticities.